Fed Holds Rates Steady as June Cut Odds Surge Amid Powell Uncertainty

Federal Reserve officials voted on March 18, 2026, to maintain the federal funds rate target at 3.50% to 3.75%, following a 25 basis-point cut at the final 2025 meeting that brought cumulative reductions to 175 basis points since September 2024.[1][4] One dissenter, Stephen I. Miran, pushed for an immediate quarter-point cut, signaling internal pressure for easing as inflation lingers above the 2% target.[4] Markets now price a June 2026 rate cut at around 4% odds, per prediction platform Kalshi, reflecting boosted expectations for monetary relief.[2][5] Jerome Powell's term as Fed chair ends May 15, 2026, introducing potential policy shifts under a new leader.[1] BlackRock's iShares forecasts a pause early in the year, followed by one or two cuts to reach 3%-3.25%, contingent on inflation and labor data.[1] The committee emphasized assessing incoming economic indicators, the evolving outlook, and risks before further adjustments.[4] Middle East tensions have driven energy prices higher, prompting J.P. Morgan to predict steady rates through 2026's April 28-29 meeting and beyond, with a possible 25 basis-point hike in Q3 2027 if inflation persists.[3] Chairman Powell noted the conflict's risks but favored a wait-and-see stance, with policy 'well-positioned' for response.[3] Economists like Michael Feroli and Michael Hanson see the Fed holding firm unless labor weakens sharply or energy fallout intensifies.[3] Inflation remains elevated above 2% as of late 2025, tempering aggressive cut bets despite prior easing.[1] The Fed recommitted to maximum employment and price stability, with reserve balances at 3.65% and primary credit at 3.75% unchanged.[4] Divergent forecasts underscore data dependence, as Powell's exit looms over 2026's path.