Fed Holds Rates Steady, Eyes Single 2026 Cut Amid Mideast Tensions

The Federal Open Market Committee (FOMC) on Wednesday maintained the federal funds rate target range at 3.5% to 3.75%, where it has stood since December 2025, marking the second consecutive pause.[1] Fed Chair Jerome Powell emphasized a patient approach, noting the policy is 'well-positioned' to handle uncertainties from the war in Iran and spiking crude oil prices.[4] The 'dot plot' of policymakers' projections showed no change from December, with seven members anticipating no cuts in 2026 and seven expecting one 25-basis-point reduction.[1] Economic forecasts brightened slightly, with the FOMC raising 2026 GDP growth to 2.4% from 2.3% and holding year-end unemployment at 4.4%, dipping to 4.3% in 2027.[1] Inflation expectations ticked up, and the long-run neutral rate median inched to 3.125%, signaling current policy may not be as restrictive as once thought.[1] One dissenter, Fed Gov. Stephen Miran, pushed for a quarter-point cut, down from two dissenters last meeting; Gov. Christopher Waller, who dissented in January, supported the hold.[1][3] Wall Street reactions were muted, with markets pricing in steady rates through mid-2026 amid energy shocks.[1] Goldman Sachs Research forecasts a December 2025 cut, followed by pauses and reductions in March and June 2026, targeting 3%-3.25%, driven by 2%-2.5% growth from easing tariffs and tax cuts.[2] J.P. Morgan predicts holds through 2026, with a potential 25-basis-point hike in Q3 2027 if inflation persists, though cuts remain possible if labor weakens.[4] Prediction markets reflect skepticism on near-term easing; Polymarket odds for a cut by the June 2026 meeting hover low, aligning with the Fed's cautious outlook.[5] Powell acknowledged cooling labor data but stressed resilience against energy price surges from Middle East tensions.[4] The next FOMC gathering is late April 28-29, 2026, where analysts expect another hold.[4][6]