Fed holds, inflation lingers
The Federal Reserve left rates at 3.50–3.75% and still projects one rate cut in 2026 — core inflation is running 2.7% while the Producer Price Index surprised higher at 3.4% vs. 2.9 expected (youtube.com)(youtube.com). Markets reacted fast — the Dow slid more than 1% after the decision as investors fretted ‘sticky’ inflation and tighter-for-longer pricing (youtube.com).
The FOMC vote was 11–1, with one official dissenting in favor of a quarter-point reduction at the March meeting. (cnbc.com) The committee’s Summary of Economic Projections raised its inflation outlook for 2026 by about 0.3 percentage point compared with December and showed a median path for the policy rate at year‑end that implies just one reduction this year. (prod-i.a.dj.com) Chair Jerome Powell told reporters the implications of the Middle East conflict are “uncertain,” warned higher energy costs will push near‑term inflation up, and said it is “too soon to know” how large or persistent those effects will be. (federalreserve.gov) The Bureau of Labor Statistics’ PPI report showed a 0.7% increase for final demand in February, driven by a 1.1% jump in goods and a 0.5% rise in services, and noted the month’s advance followed a string of gains earlier in the year. (bls.gov) Equity and fixed‑income markets moved sharply: the S&P 500 and Nasdaq both closed down about 1.4–1.5% after the session, while two‑year Treasury yields spiked roughly a dozen‑plus basis points amid re‑priced expectations for the timing of cuts. (cnbc.com) Futures and the dot plot together reflected fewer expected reductions than in December, with a shift in participants’ guesses toward only a single cut this year rather than multiple cuts previously priced in by markets. (cnbc.com)
