<blockquote>Key Points:As expected by the market, the Federal Reserve paused interest rate cuts in two consecutive meetings, with the number of dissenting voters halved to one. The Trump-appointed governor, Milan, continues to advocate for a 25 basis point rate cut.The meeting statement added a description of the uncertain impact of the Middle East situation on the U.S. economy, with the unemployment rate changing from showing some signs of stabilization to &#34;basically unchanged.&#34;The median value of interest rate expectations mostly remained flat from the last meeting, suggesting one rate cut each this year and next year, with long-term interest rate expectations raised to 3.1%.In the dot plot, seven members expect no rate cuts this year, while 12 anticipate at least one 25 basis point cut, with one member expecting four cuts; one member expects one rate hike next year.In the economic outlook, GDP expectations for this year, next year, and the longer term were raised, while the unemployment rate expectation for next year was lowered, with inflation expectations for this year and next raised to 2.7% and 2.2%, respectively.&#34;New Federal Reserve News Agency&#34;: Due to the threat of rising energy prices triggered by the Iran conflict, the Federal Reserve's battle against inflation may be forced to extend.</blockquote>As expected by the market, the Federal Reserve remained on hold, with all voting members except for Trump’s appointee, Governor Milan, supporting the pause in rate cuts. The Fed decision-makers remain cautious about rate cuts, with interest rate expectations unchanged over the past two years, specifically noting the uncertainty of the Middle East situation's impact on the U.S. economy.On March 18, Eastern Time, the Federal Reserve announced after the Federal Open Market Committee (FOMC) meeting that it would keep the target range for the federal funds rate unchanged at 3.50% to 3.75%. This marks the second consecutive FOMC meeting where the Fed has paused rate cuts after three consecutive cuts at the end of last year. In the latest economic outlook, Fed officials raised their inflation expectations and GDP growth expectations for this year and next.The dot plot released after the meeting shows that the recent interest rate path forecast by the Fed decision-makers is consistent with the last dot plot published in December last year, still expecting only one 25 basis point rate cut this year, in 2026, and only one cut next year.This Fed decision was anticipated by the market. By the close on Tuesday, CME tools indicated that the futures market expected a nearly 99% probability of no rate cuts this week, a nearly 96% probability of no cuts at the next meeting in April, and a slightly over 60% probability of no cuts in July; by the end of 2026, the probability of no cuts this year is slightly over 30%, with a nearly 70% probability of a rate cut, of which about 40% is for one cut and nearly 30% for at least two cuts.Aside from the impact of the Middle East situation, there were almost no significant changes in this Fed decision statement compared to the last one.George Goncalves, head of U.S. macro strategy at Mitsubishi UFJ Financial Group (MUFG), commented that the Fed issued a &#34;neutral&#34; statement, stating, &#34;The slight adjustments in the statement aim to avoid sending any specific signals while also conveying that they (the Fed) are vigilant about the growth shocks and inflation spillover effects that may arise from the Middle East conflict.&#34;Ira Jersey, chief U.S. interest rate strategist at Bloomberg Industry Research, noted that compared to the uncertainty mentioned in the Fed statement regarding the Middle East situation, the Fed's upward revision of inflation expectations in the economic outlook is more prominent, indicating that the Fed is more concerned about current oil-related inflation and relatively less concerned about such inflation next yearTherefore, the Federal Reserve's outlook has more or less incorporated this stepwise increase in inflation.Nick Timiraos, a senior Federal Reserve reporter known as the &#34;New Federal Reserve Correspondent,&#34; pointed out in an article that the Federal Reserve's decision to keep interest rates unchanged coincides with the &#34;cloud of war in Iran overshadowing the outlook.&#34; Before the change in the Federal Reserve chairmanship, &#34;a new oil shock poses a threat to extend the Federal Reserve's years-long battle against inflation.&#34;The article begins by stating that the Federal Reserve is holding steady and maintaining its forecast for potential rate cuts this year, &#34;due to the threat of rising energy prices triggered by the war in Iran, the Federal Reserve's years-long efforts against inflation may be forced to extend.&#34;<h2>New Uncertainty Statement on Middle East Impact, Referred to Unemployment Rate as Basically Unchanged</h2>Compared to the last meeting at the end of January, the biggest difference in this meeting's statement is the addition of a sentence regarding the situation in the Middle East:<blockquote>“The impact of the evolving situation in the Middle East on the U.S. economy remains uncertain.”</blockquote>Before this sentence, the statement continues to reiterate that the FOMC is committed to achieving maximum employment and a 2% inflation rate target in the long term, and the uncertainty surrounding the U.S. economic outlook remains high. After this sentence, the statement again reaffirms that the FOMC is closely monitoring the risks faced in both employment and inflation.In terms of commenting on the economic situation, this statement made only slight adjustments compared to the last one. Last time it said, the unemployment rate &#34;showed some signs of stabilization,&#34; this time it says, “the unemployment rate has basically remained unchanged in recent months.” The commentary suggests that the Federal Reserve's assessment of the labor market has been slightly downgraded.Other statements were directly copied from the last statement, indicating that existing indicators show economic activity &#34;has been steadily expanding,&#34; employment growth remains low, and reiterating that inflation rates are still somewhat elevated.The statement did not mention any changes related to the purchase of government bonds or balance sheet adjustments, indicating that the New York Fed's Reserve Management Purchase (RMP) actions are proceeding as planned without changes.In the FOMC meeting held in December last year, the so-called Reserve Management was announced, stating that the FOMC believes &#34;the reserve balances have fallen to adequate levels and will begin purchasing short-term government bonds as needed to maintain sufficient reserve supply.&#34; At that time, the New York Fed announced plans to buy $40 billion in short-term government bonds starting from December 11 for the next 30 days.<h2>Opposition Votes Halved to One, Miran Again Supports a 25 Basis Point Rate Cut</h2>Another significant difference in this statement compared to the last one is that among the 12 FOMC voting members, only one person voted against this time, halving the number of dissenters from the last meeting. This means that the opposition votes for this rate decision are the fewest in the last four meetings.The statement released this Wednesday shows that 11 FOMC members supported keeping interest rates unchanged, including Christopher Waller, a Federal Reserve governor who voted against the last decision due to advocating for a 25 basis point rate cut. Only Stephen Miran, another Federal Reserve governor, voted against this rate decision again in support of a rate cut.Thus, there have been dissenting votes in six consecutive FOMC meetings. White House economic advisor Miran has consistently voted against the rate decisions since he assumed the governorship in September last year. The difference is that in the three meetings in September, October, and December last year, he consistently advocated for a 50 basis point rate cut, while this year he has consistently supported a 25 basis point rate cutThe following red text shows the deletions and additions in this resolution statement compared to the last one.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3db65efb-0ab4-4021-945d-8d08b098dd65.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3db65efb-0ab4-4021-945d-8d08b098dd65.png"/><h2>Still Expecting One Rate Cut This Year and Next Year; One Official Expects a Rate Hike Next Year</h2>The median value of the Federal Reserve officials' interest rate forecasts released after the meeting on Wednesday shows that the expectations of the Fed officials this time are mostly consistent with the last forecast published in December. The specific median predictions are as follows:<blockquote>The federal funds rate is expected to be 3.4% by the end of 2026, 3.1% by the end of 2027, and 3.1% by the end of 2028, all unchanged from the December forecast; the longer-term federal funds rate is expected to be 3.1%, compared to 3.0% in December.</blockquote>Based on the above median interest rates, similar to the last forecast, Fed officials currently also expect that after three rate cuts last year, there will likely be one rate cut of 25 basis points each this year and next year.The dot plot shows that among the 19 Fed officials providing interest rate forecasts, seven officials expect no rate cuts this year, one less than the last prediction.Among the 12 officials who expect at least one rate cut this year, seven expect one cut, two expect two cuts, and two expect three cuts. Additionally, one official expects four cuts, and it is speculated that this person is likely from the Fed in Milan.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3f12be25-6b61-4da0-89ed-a5a7cca946c3.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3f12be25-6b61-4da0-89ed-a5a7cca946c3.jpeg"/>Regarding the interest rate expectations for next year, one official expects there will be one rate hike.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/03aa5193-16f2-4f94-92ac-2265bc5b902f.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/03aa5193-16f2-4f94-92ac-2265bc5b902f.jpeg"/><h2>Upgraded GDP Expectations for This Year, Next Year, and the Following Years, as well as Inflation Expectations for This Year and Next Year</h2>The economic outlook released after the meeting shows that Fed officials have upgraded their GDP growth expectations for this year, next year, and the following years, raised the unemployment rate expectations for next year, and upgraded the PCE inflation and core PCE inflation expectations for this year and next year. Both inflation indicators for this year have been raised to 2.7%, and next year's have been raised to 2.2%.The largest upward adjustment was made to this year's PCE inflation expectations and next year's GDP growth expectations, both increased by 0.3 percentage points compared to the last forecast. This year's core PCE inflation expectations and GDP growth expectations for the following years and the longer term have been raised by 0.2 percentage points compared to the last forecast.The specific predictions are as follows:<ul><li>The GDP growth rate for 2026 is expected to be 2.4%, compared to 2.3% expected in December 2025; the expected growth rate for 2027 is 2.3%, compared to 2.0% in December; the expected growth rate for 2028 is 2.1%, compared to 1.9% in December; the longer-term expected growth rate is 2.0%, compared to 1.8% in December</li><li>The unemployment rate forecast for 2026 is 4.4%, unchanged from the December forecast, with the 2027 forecast at 4.3%, compared to 4.2% in December. The unemployment rate forecast for 2028 and the longer term is 4.2%, also unchanged from the December forecast.</li><li>The PCE inflation rate forecast for 2026 is 2.7%, compared to 2.4% in December, with the growth forecast for 2027 at 2.2%, compared to 2.1% in December. The forecast for 2028 and the longer term is 2.0%, unchanged from the December forecast.</li><li>The core PCE forecast for 2026 is 2.7%, compared to 2.5% in December, with the 2027 forecast at 2.2%, compared to 2.1% in December. The forecast for 2028 is 2.0%, unchanged from the December forecast.</li></ul><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b70c44aa-02bf-43a0-a5a7-f48d1fb2b3e8.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b70c44aa-02bf-43a0-a5a7-f48d1fb2b3e8.jpeg"/>

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This time there was one dissenting vote, and board member Milan continued to advocate for a 25 basis point rate cut. The statement added a description of the uncertainty of the impact of the Middle East situation on the U.S. economy, and changed the unemployment rate to "basically unchanged." In the dot plot, seven members expect no rate cuts this year, while 12 anticipate at least one rate cut; one expects a rate hike next year. The Federal Reserve raised its GDP forecasts for this year, next year, and the longer term, with inflation expectations for this year and next year rising to 2.7% and 2.2%, respectively. "New Federal Reserve News Agency": The threat of conflict in Iran may force the Federal Reserve's battle against inflation to be prolonged

- The Federal Reserve maintained its target federal funds rate between 3.50% and 3.75% during the latest FOMC meeting, with only one dissenter, Mark Miran, advocating for a 25 basis point cut.  
- The meeting statement highlighted uncertainties regarding the Middle East's impact on the U.S. economy and modified the unemployment rate outlook to show it has remained largely unchanged.  
- Officials increased GDP and inflation expectations, anticipating one rate cut this year and next, while predicting long-term inflation rates to rise to 3.1%.

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The Federal Reserve continues to hold steady as expected, noting the uncertainty of Middle Eastern impacts, raising inflation expectations, and still anticipating one rate cut this year