

The Federal Reserve kept a steady hand on its overnight lending rate, maintaining a target range of 3.5% to 3.75%. The central bank’s “dot plot” suggests a cut may be in the cards in 2026. The policymakers’ move came at a key time for investors: Oil prices have been surging amid the Iran war, with Brent futures topping $109 a barrel at one point Wednesday. The producer price index report for February also came in hot, leading futures markets to sharply curtail the outlook for rate cuts this year. At his press conference, Fed Chair Jerome Powell said, “The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation.”
With fears of higher oil prices heating up inflation while weakening growth, Fed Chair Powell said that he wouldn’t use the term “stagflation” to describe the U.S. economy. “I always have to point out that that was a 1970s term, at a time when unemployment was in double figures and inflation was really high,” he said. “We actually have unemployment really close to longer-run normal, and we have inflation that’s 1 percentage point above that.” He added, “I would reserve the term stagflation for a much more serious set of circumstances.” The Fed’s summary of economic projections revealed a higher inflation forecast compared with previous estimates, but also stronger growth. Powell said that was due to productivity gains that members of the Federal Open Market Committee expect to see.
Source: CNBC
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