Monday, April 13, 2026
The Federal Reserve met and did nothing. Normally, this wouldn’t be big news. But when it’s in context of a new war, the Fed’s reaction can take on more importance.
To recap: the Fed finished its two-day policy meeting, and as widely expected, held its benchmark federal funds rate steady between 3.50%-3.75%.
The 19 central bank members also released quarterly economic projections and an outlook for the rest of the year. Expectations for real gross domestic product in 2026 nudged up to 2.4%, and unemployment projections similarly ticked up to 4.4%.
More notably, the central bankers projected inflation to be 2.7% for the rest of 2026. I heartily disagree. That 2.7% figure is up from the 2.4% the Fed projected in December, which I also thought was suspect.
Lastly, the Fed projects one 25-basis-point cut to the federal funds rate for the rest of the year. Not long ago, pundits said multiple cuts in 2026 were a “sure thing.”
Why the change?
Chair Jerome Powell said the implications of developments in the Middle East for the U.S. economy are uncertain.
He told reporters after the meeting he feels the Fed already lowered the federal funds rate to a level that’s plausibly neutral in December, saying it’s the right spot for policy today. He also acknowledged the risks ahead, like how higher energy prices, given the Iran war, will push up overall inflation.
So, it was big news this time as the Fed held steady.
Daniel A. White is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Daniel A. White & Associates and CoreCap Advisors are separate and unaffiliated entities.