Research
March 18, 2026
Monetary Policy
Federal Reserve leaves interest rates unchanged for second straight meeting
At its March 17–18 meeting, the Federal Open Market Committee (FOMC) left short‑term interest rates unchanged, marking a second straight meeting of steady policy following three consecutive 25‑basis‑point cuts at the end of 2025. The federal funds rate remains in a target range of 3.50% to 3.75%, with only one dissent—Stephen I. Miran—who favored an additional quarter‑point cut.
The Committee reaffirmed that 2% inflation, measured by the PCE deflator, remains the benchmark most consistent with its dual mandate of maximum employment and price stability, and that this target will continue to guide policy decisions.
FOMC participants said the U.S. economy is still expanding at a “solid pace,” though inflation remains “somewhat elevated.” Job growth has cooled, but the unemployment rate has been “little changed in recent months,” suggesting only modest labor‑market softening.
In their latest economic projections, Federal Reserve officials expect real GDP to grow 2.4% in 2026 and project core PCE inflation at 2.7%, up from the 2.5% estimate in December. Policymakers still anticipate a median of one 25‑basis‑point rate cut in 2026, unchanged from three months earlier.
Overall, the Fed finds itself in a challenging position. Softer hiring and risks to the outlook argue for lowering rates to support growth. Yet inflation pressures remain stubborn, particularly amid still‑resilient economic growth. The conflict in Iran also risks renewed price acceleration. Given this tension, the Committee is likely to maintain a cautious stance and keep policy steady while it monitors incoming data, including with its next meeting on April 28–29. Further rate cuts remain possible later in 2026 but are unlikely before mid‑year.
For the restaurant industry, elevated interest rates continue to weigh on borrowing costs, often slowing expansion, renovation, and other capital investments. A lower‑rate environment would help ease credit burdens, strengthen consumer spending, and support demand in sectors highly sensitive to discretionary income, including foodservice and hospitality.
The Committee reaffirmed that 2% inflation, measured by the PCE deflator, remains the benchmark most consistent with its dual mandate of maximum employment and price stability, and that this target will continue to guide policy decisions.
FOMC participants said the U.S. economy is still expanding at a “solid pace,” though inflation remains “somewhat elevated.” Job growth has cooled, but the unemployment rate has been “little changed in recent months,” suggesting only modest labor‑market softening.
In their latest economic projections, Federal Reserve officials expect real GDP to grow 2.4% in 2026 and project core PCE inflation at 2.7%, up from the 2.5% estimate in December. Policymakers still anticipate a median of one 25‑basis‑point rate cut in 2026, unchanged from three months earlier.
Overall, the Fed finds itself in a challenging position. Softer hiring and risks to the outlook argue for lowering rates to support growth. Yet inflation pressures remain stubborn, particularly amid still‑resilient economic growth. The conflict in Iran also risks renewed price acceleration. Given this tension, the Committee is likely to maintain a cautious stance and keep policy steady while it monitors incoming data, including with its next meeting on April 28–29. Further rate cuts remain possible later in 2026 but are unlikely before mid‑year.
For the restaurant industry, elevated interest rates continue to weigh on borrowing costs, often slowing expansion, renovation, and other capital investments. A lower‑rate environment would help ease credit burdens, strengthen consumer spending, and support demand in sectors highly sensitive to discretionary income, including foodservice and hospitality.