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Global markets turned lower after the latest Fed interest rates announcement, as investors weighed persistent inflation risks against rising geopolitical tensions in the Middle East. Federal Reserve holds rates and cites geopolitical risks The Federal Reserve kept its benchmark range at 3.50%–3.75% on Wednesday, March 18, 2026, matching broad market expectations after weeks of cautious positioning across asset classes. The policy decision passed on an 11-1 vote, with Stephen Miran casting the only dissent in favor of a 25 basis point cut, underscoring a minority push for earlier monetary easing. Officials highlighted the escalating U.S.-Iran military confrontation as a key factor. Moreover, crude oil has surged to around $100 per barrel, up sharply from below $60 earlier in the year, amplifying inflation concerns. “The implications of events in the Middle East for the US economy are uncertain in the near term,” Chair Jerome Powell said, adding that higher energy prices will lift overall inflation, although the scope and duration of the impact remain unclear. Powell described economic growth as proceeding at a healthy rate. Household consumption is still strong and corporate capital expenditure continues to advance. However, real estate activity remains soft and labor market data point to a gradual cooling. Inflation projections revised higher for 2026 The Fed raised its 2026 inflation projection to 2.7%, up from a prior estimate of 2.4%, explicitly linking the revision to the recent Middle East tensions and the associated energy shock. Policymakers still expect price pressures to ease over time. That said, the central bank forecasts inflation will slow to 2.2% in 2027, suggesting a prolonged but controlled disinflation path rather than a rapid drop back to target. The Fed interest rates stance is therefore framed as a balancing act: restraining price growth that remains above the 2% goal while avoiding unnecessary damage…

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Filed under: News - @ March 19, 2026 11:30 am