The Federal Reserve (Fed) decided to keep the interest rate unchanged at the meeting held on March 17 and 18, 2026, with a strong signal that there will be no cuts throughout this year. According to interest rate futures, the chance of maintaining the rate at the next meeting, scheduled for April 29, reaches 99.5%, while the probability of cuts was practically ruled out by the market.
In just one month, there was a significant shift in market expectations. On March 4, the probabilities indicated an 88.2% chance of maintenance and 12% for a 0.25 percentage point cut. However, in the mid-March meeting, 10 of the 11 members voted to maintain the rate, while a single vote favored an immediate cut. Thus, the scenario evolved towards a more conservative view of monetary easing.
The projection for the June 17 meeting also shows a change in this outlook. The chance of maintaining the rate is at 96.7%, compared to 66.8% at the beginning of March. Still, the financial market remains open to analysis, given that economic indicators still point to a risk of sharp inflation.
Futures contracts indicate that the probability that there will be no cuts in interest rates in 2026 is 36% on the Polymarket platform and 38.5% on Kalshi, with a cumulative trading volume of US$ 2.9 million. This reinforces the understanding that the Fed is adopting a cautious stance and waiting for more consistent data before any change in monetary policy.
The revision of the Economic Summary on March 18 pointed to an increase in the inflation projection measured by the PCE (Personal Consumption Expenditures) index to 2.7% in 2026, against 2.4% estimated in December of the previous year. This assessment also included the core PCE inflation, which excludes volatile prices such as food and energy, and was adjusted to the same percentage. Consequently, easing measures may be postponed.
The Federal Reserve Chairman, Jerome Powell, emphasized the need to observe clearer statistics before implementing any change in monetary policy. According to Powell, the institution will continue evaluating economic data to ensure that inflation remains under control, avoiding hasty decisions that could generate instability.
Although the investment bank Citi maintains the forecast of total cuts of 75 basis points for 2026, the institution revised its schedule and now projects these cuts to occur only after February, which is consistent with the Fed’s current stance. This indicates, therefore, that major changes in the basic interest rate are not expected in the short term.
Besides domestic factors, the international scenario has a significant impact on the Fed’s decisions. The WTI crude oil price surpassed US$ 110 per barrel amid the Middle East crisis, something not seen since 2022. Brent closed above US$ 107, pressured by tensions involving Iran and the conflict with Israel, which affected global energy trade.
In the city of Houston, the physical oil premium rose to US$ 5.50 above futures contracts, reflecting greater concern about the immediate supply of this commodity. The situation worsened with the near halt of traffic in the Strait of Hormuz since February 2026, a vital route responsible for 20% of global oil trade.
In response, the International Energy Agency coordinated the emergency release of stocks by more than 30 countries to mitigate the effects of supply shocks. This measure sought to contain price rises in the market, but the average gasoline price in the United States is already approaching US$ 4 per gallon, an increase of about US$ 1 since the beginning of the Middle East conflict.
According to recent data, the average mortgage interest rate for 30-year contracts in the US is 6.38%. The rise in energy costs and inflationary pressures derived from the geopolitical scenario reinforce the Federal Reserve’s decision to keep the interest rate high. Thus, the central bank avoids cuts that could fuel a resurgence of inflation.
The term of the current Fed chairman, Jerome Powell, ends on May 15, 2026. However, Donald Trump has nominated Kevin Warsh as his candidate to assume the presidency of the institution. Powell is expected to remain as governor until January 31, 2028, although with reduced influence and vote within the monetary policy committee.
The conclusion of this transition process still depends on the approval of the United States Senate and possible regulatory reviews. Meanwhile, monetary policy continues to be guided by the need to balance inflation control against current economic and geopolitical challenges.
