The Federal Reserve kept the target range for the federal funds rate unchanged at 3.50% to 3.75% at its March meeting, marking a second consecutive pause. The decision matched broad market expectations.
The bigger shift came in the Summary of Economic Projections. Federal Open Market Committee officials lifted their forecasts for inflation and economic growth, signaling that they still see the US economy holding up well even under elevated rates.
2026 inflation forecasts moved higher
In the new projections, the median forecast for 2026 headline PCE inflation rose from 2.4% to 2.7%. Core PCE for 2026 was also revised up, from 2.5% to 2.7%. For 2027, both headline and core PCE were projected at 2.2%, compared with 2.1% previously. The longer-run PCE inflation estimate stayed at 2.0%.
Those revisions show a more cautious view on how quickly price pressures may ease. Rates were left untouched, but the inflation path was adjusted higher, with the change for 2026 standing out the most.
Growth outlook strengthened while labor forecasts stayed steady
Officials also marked up their growth outlook. The median forecast for 2026 real GDP growth increased from 2.3% to 2.4%. The 2027 estimate was lifted from 2.0% to 2.3%, while the longer-run growth projection rose from 1.8% to 2.0%.
On employment, the median unemployment rate forecast for 2026 was unchanged at 4.4%. The 2027 forecast edged up from 4.2% to 4.3%, and the longer-run estimate remained at 4.2%. Taken together, the projections do not point to a baseline view of a sharp downturn or a weakened labor market.
Dot plot kept 2026 year-end rate at 3.4%
The dot plot did not show a more aggressive rate path. The median projection for the federal funds rate at the end of 2026 remained 3.4%, unchanged from the prior set of forecasts. The 2027 median also stayed at 3.1%.
The adjustment came in the longer-run rate view. The median estimate for the longer-run federal funds rate, often read as a proxy for the neutral rate, moved up from 3.0% to 3.1%. The change was small, but it pointed to a slightly higher long-term rate center.
The key message from the meeting was not the hold itself. It was the hotter set of projections: higher inflation expectations, firmer growth forecasts, and a 2026 year-end policy rate still anchored at 3.4%.