Fed expected to hold rates steady
Don't expect a Fed rate cut anytime soon—markets anticipate rates will hold steady at the March meeting, with the first cut likely in June due to persistent inflation risks [https://www.cnbc.com/2026/03/12/markets-hopes-for-fed-interest-rate-cuts-are-rapidly-fading-away.html], [https://www.reuters.com/business/fed-cut-rates-june-economists-still-say-despite-war-inflation-risks-2026-03-12/]. Core PCE inflation remains stuck at 3% [https://markets.financialcontent.com/stocks/article/marketminute-2026-3-12-stubborn-inflation-in-2026-why-3-core-pce-is-keeping-the-fed-on-hold]. What specific inflation metrics is the Fed watching most closely?
The Fed's decision to likely hold rates steady at the March meeting comes as core PCE inflation remains stubbornly high at 3%. This key inflation metric, which excludes volatile food and energy prices, is a primary factor influencing the Fed's monetary policy decisions. Economists are closely watching the impact of geopolitical events, like the ongoing war in Ukraine, on inflation and the global economy. Supply chain disruptions and rising energy prices stemming from the conflict could further complicate the Fed's efforts to bring inflation back to its 2% target. Despite some expectations for earlier rate cuts, the market is now largely aligned with the view that the Fed will wait until June to begin easing monetary policy. This delay reflects concerns that prematurely lowering rates could reignite inflationary pressures.
