Fed holds rates, pegs one cut
The Fed left its benchmark rate at 3.50–3.75% and now projects just a single rate cut for 2026 — a clear "higher for longer" signal that tightens financing across deals and funds. Markets and recruiters are already pricing a tougher fundraising environment and trickier valuation math for LBOs and DCFs. (morningstar.com) (thestreet.com)
FOMC voting was 11–1 at the March 17–18 policy meeting, with officials stressing uncertainty from the Middle East and that further cuts hinge on concrete progress in reducing goods inflation, according to Chair Jerome Powell’s remarks. (bloomberg.com) The Fed’s dot-plot median implies a year-end policy rate near 3.4% for 2026, a specific central-tendency that markets read as only a fractional easing relative to current policy assumptions. (cnbc.com) U.S. Treasury yields jumped across the curve after the decision, with the 10-year yield climbing into the mid-4% range (roughly 4.3%–4.4%) and the 2-year moving toward the high-3% area as traders pulled forward rate-risk premium. (cnbc.com) J.P. Morgan’s economists have publicly pushed back on the Fed’s easing outlook, with Michael Feroli and other strategists warning the bank now sees little to no chance of cuts in 2026 given persistent inflation and energy risks. (thestreet.com) Analysts note the mechanical effects for models used in hiring tests and deal memos: a higher risk-free rate and wider credit spreads lift WACC inputs and cost-of-debt assumptions, and a 100-basis-point rise in the discount rate can materially compress DCF valuations for long-duration growth projections. (ibankingadvice.com) Industry reports show private-capital dynamics already tightening: Bain documents uneven fundraising and concentrated capital at the top, Preqin compendia point to roughly $3.7 trillion of dry powder still chasing deals, and Baker McKenzie highlights a roughly $15 trillion refinancing wall through 2026–2028 that will shape sponsor timing and lender appetite. (bain.com)
