Federal Reserve Holds Rates Steady for Second Consecutive Meeting, Maintains 3.5-3.75%! Dot Plot Raises 2026 Inflation and GDP Projections, Year-End Rate Estimate 3.4%

The U.S. Federal Reserve (Fed) officially announced at 2 a.m. Taipei time on March 19 that it would keep the benchmark interest rate unchanged in the 3.50%-3.75% range for the second consecutive time, in line with widespread market expectations. Simultaneously released, the latest Summary of Economic Projections (SEP) delivered a shock: FOMC officials significantly raised the median PCE inflation forecast for 2026 to 2.7% and upgraded the real GDP growth rate to 2.4%.
(Background: Inflation ghost returns! U.S. February PPI soars 3.4% YoY, rebounding in commodities and hitting rate cut expectations)
(Additional context: Fed’s warning: Five years of inflation setbacks, Middle East conflicts push rate cut expectations to zero)

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• Summary of Economic Projections (SEP): Acknowledging rising inflation but stronger economy
• Dot Plot Insights: Tolerance for slight inflation increase, long-term rates quietly rising
• March 2026 FOMC Economic Projections and Rate Changes

The highly anticipated March rate decision meeting of the U.S. Federal Reserve has concluded. On March 19, Eastern Time, the Federal Open Market Committee (FOMC) unanimously agreed to keep the federal funds target rate in the 3.50% to 3.75% range.

This marks the second consecutive meeting where the Fed chose to hold steady, fully aligning with prior market pricing expectations from Wall Street and CME FedWatch tools.

Summary of Economic Projections (SEP): Acknowledging rising inflation but stronger economy

While the rate decision itself was not surprising, the subsequent SEP released provided the market with a wealth of macro signals. Data indicates that the Fed is mentally prepared for the U.S. economy to operate at a “high temperature”:

• Inflation expectations revised upward across the board: Officials raised the median forecast for the 2026 PCE inflation rate from 2.4% in December last year to 2.7%; core PCE excluding food and energy was also increased from 2.5% to 2.7%. This suggests recent data, such as soaring PPI, has indeed influenced the Fed’s view on the pace of price decline.
• Optimism about GDP growth potential: The median forecast for real GDP growth in 2026 was revised upward from 2.3% to 2.4%, and for 2027 from 2.0% to 2.3%. More importantly, the long-term economic growth forecast was raised from 1.8% to 2.0%, indicating the U.S. economy shows no signs of fatigue despite prolonged high interest rates.
• Employment market remains robust: The median unemployment rate forecast for 2026 remains at 4.4%, dispelling market fears of a hard economic landing.

Dot Plot Insights: Tolerance for slight inflation increase, long-term rates quietly rising

Amid hotter macro data expectations, the market’s biggest concern was whether the Fed would turn hawkish and delay rate cuts.

However, the latest “Dot Plot” reveals the Fed’s resolve. Officials’ median forecast for the federal funds rate at the end of 2026 remains steady at 3.4% (unchanged from December last year).

Notably, the median of the “Longer run” federal funds rate, representing the long-term neutral rate, has slightly increased from 3.0% to 3.1%.

March 2026 FOMC Economic Projections and Rate Changes