--- title: "Powell's \"expectation management\" tone shifts to caution: The Federal Reserve temporarily pauses interest rate cuts, awaiting the impact of the war" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/279696025.md" description: "Federal Reserve Chairman Jerome Powell stated at the latest monetary policy meeting that due to persistent inflation and the unclear impact of the Middle East war, the Federal Reserve has decided not to cut interest rates for the time being. Powell emphasized that the Federal Reserve will not return to a rate-cutting trajectory until there is a significant improvement in inflation, and that rate hikes may be considered in the future. The market's interest rate outlook indicates that only one rate cut is expected in 2026, and only one rate cut is anticipated next year" datetime: "2026-03-19T00:55:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279696025.md) - [en](https://longbridge.com/en/news/279696025.md) - [zh-HK](https://longbridge.com/zh-HK/news/279696025.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/279696025.md) | [English](https://longbridge.com/en/news/279696025.md) # Powell's "expectation management" tone shifts to caution: The Federal Reserve temporarily pauses interest rate cuts, awaiting the impact of the war According to the Zhitong Finance APP, in the early hours of Thursday Beijing time, the Federal Reserve's latest monetary policy decision revealed that the Fed paused interest rate cuts for two consecutive meetings as the financial markets had expected. The meeting statement included a new expression regarding the uncertainty of the impact of the geopolitical situation in the Middle East on the U.S. economy, and the unemployment rate was changed from showing some signs of stabilization to "basically unchanged." The market's focus on the dot plot of interest rates showed that the Fed policymakers' outlook for interest rates is largely consistent with the last dot plot published in December last year, still expecting only one 25 basis point rate cut in 2026, and only one rate cut next year. Fed Chairman Jerome Powell clearly stated at the post-meeting press conference that the Fed may not return to a rate-cutting trajectory until inflation shows signs of cooling again. He emphasized that it is still too early to assess the inflationary impact that the Middle East war may bring. Powell emphasized at the press conference on Wednesday local time that it is still too early to evaluate the impact of soaring oil prices on the U.S. economy, although financial markets have quickly factored in higher inflation expectations for the next year. Instead, he focused on signs that price pressures have persisted longer than policymakers had originally hoped, even before the outbreak of the Iran war. "What we really want to see this year, and it is very important, is progress on inflation," Powell stated at the press conference. "If we don't see that progress, then you won't see rate cuts." The Fed chairman made these remarks after deciding to keep interest rates unchanged for two consecutive meetings. This statement reinforced the view that, due to consistently uncooperative consumer price data, the Fed is still quite far from resuming the series of rate cuts it initiated at the end of 2025. This sticky inflation trend has also raised the possibility that the Fed's next move could ultimately turn into an interest rate hike. Powell acknowledged that this possibility re-emerged in discussions among Fed policymakers this week—however, he added that this is not the baseline expectation of most policymakers. According to the latest economic forecast summary released on Wednesday, Fed policymakers maintained their median estimate of only one rate cut this year, consistent with their previous forecast. However, they unexpectedly raised their forecast for the U.S. economic growth rate, indicating that they are not yet concerned about the potential dampening effects of higher energy costs. Powell mentioned that there is uncertainty in the interest rate expectations of individual policymakers, and the interest rate forecast dot plot is not a predetermined path; the Fed will decide at each meeting in the future. He also stated that some policymakers tend to reduce the number of future rate cuts. ![1773880771(1).png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260319/1773880780586252.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) The dot plot shows that among the 19 Federal Reserve officials providing interest rate forecasts, seven expect no rate cuts this year, one less than the previous forecast. Among the 12 officials who expect at least one rate cut this year, seven anticipate one cut, two expect two cuts, and two expect three cuts. Additionally, one official expects four cuts, and it is believed that this person is likely to be Federal Reserve Governor Michelle Bowman, nominated by Trump. Regarding next year's rate expectations, one official anticipates one rate hike. **Inflation Expectations Raised** Meanwhile, Federal Reserve policymakers have raised their inflation estimates, which Powell attributed mainly to the short-term effects of tariffs during the press conference. He pointed out that price pressures are particularly stubborn in those categories of goods most affected by tariffs. "Before we check that box, meaning before we see progress on inflation, the severe issue of energy inflation is not likely to truly emerge," Powell stated. Despite low hiring trends raising concerns that the labor market may be on the brink of more significant pain, the Federal Reserve Chair also expressed optimism about the labor market outlook. He mentioned the unemployment rate, which has not changed much since September, and noted that macro data has not shown contributions from AI. Powell stated that the productivity improvements currently observed cannot be attributed to generative AI, as the relevant impacts will take years to be confirmed. Instead, the ongoing construction of large-scale AI data centers is significantly increasing demand for goods and services, which could both raise inflationary pressures and elevate neutral interest rates. Concerns about the U.S. non-farm employment market have prompted the Federal Reserve to cut rates by 75 basis points by the end of 2025. Currently, most policymakers believe that interest rates are close to a neutral level that neither hinders growth nor stimulates it, Powell said, which is precisely "where current rates should be." "The market has been worried that sustained oil prices above $100 could pose risks to growth and increasingly severe inflation risks," said Priya Misra, a portfolio manager at JPMorgan Asset Management. "It seems that the Federal Reserve may be more concerned about inflation risks, perhaps simply because the deviation of inflation data from its target is greater than the deviation of the unemployment rate from its target." Former Federal Reserve Vice Chairman Roger Ferguson stated in a media interview that when weighing the complex situation between the labor market and inflation, the Federal Reserve may be more inclined to focus on price trends. "I am more concerned about higher inflation. You know, the Federal Reserve's target is 2%. In fact, they have deviated from this target for several years," he said. "At some point, people will start to question whether the 2% target is truly what the Federal Reserve is pursuing, so I am much more worried about this." **Judicial Battle** However, Federal Reserve Chair Powell's firm stance on higher neutral rates is likely to further anger U.S. President Donald Trump. Just on Wednesday morning local time, Trump again urged the Federal Reserve to cut rates Powell is currently embroiled in a legal battle with the Department of Justice. He stated on Wednesday that he plans to remain at the Federal Reserve while the investigation into him by the U.S. government is ongoing. Recently submitted court documents show that Powell believes it is necessary for him to stay at the U.S. central bank to defend the independence of the Federal Reserve's monetary policy. Although his term as Chairman of the Federal Reserve will end in May, he can choose to remain on the Board of Governors, where his term will last until 2028. In recent weeks, as the Department of Justice's investigation into Powell has progressed, speculation about whether he will do so has intensified. "Staying on the Board until the Department of Justice investigation is concluded makes logical sense," said Kathy Bostjancic, Chief Economist at Nationwide. Even if the investigation concludes before May, "he still hasn't decided whether he will stay, and I think that might be the most critical part that you don't really know yet." In January, the Department of Justice issued a subpoena to Federal Reserve Chairman Powell as part of its investigation into cost overruns on a construction renovation project. Powell stated at the time that the reasons cited for the investigation were merely excuses, and that the real trigger for the investigation was the Federal Reserve's refusal to set the benchmark interest rate lower at the request of Trump. Powell stated at a press conference that he has no plans to resign from the Board until the U.S. government's investigation is completed, the process is transparent, and the conclusions are clear; he added that if a successor has not been confirmed by the end of his term as Chairman, he will continue to serve as acting Chairman in accordance with legal provisions until a new Chairman is officially in place, to ensure that the Federal Reserve's operations and independence are not subject to political interference. Economists generally believe that monetary policy-making free from political interference can lead to better economic growth outcomes. Central bank governors who directly follow government directives often perform poorly in controlling inflation—this point was highlighted by New York Fed President Williams earlier in January ### 相關股票 - [VG Financial (VFH.US)](https://longbridge.com/zh-HK/quote/VFH.US.md) - [Invesco Db Dlr Idx Bearish ETF (UDN.US)](https://longbridge.com/zh-HK/quote/UDN.US.md) - [Wtree Bbg Usd Bull (USDU.US)](https://longbridge.com/zh-HK/quote/USDU.US.md) - [Invesco DB US Dollar Index Bullish Fund (UUP.US)](https://longbridge.com/zh-HK/quote/UUP.US.md) - [JPMorgan Equity Premium Inc ETF (JEPI.US)](https://longbridge.com/zh-HK/quote/JEPI.US.md) - [ISHRS Us Brokers & Sec Exchg (IAI.US)](https://longbridge.com/zh-HK/quote/IAI.US.md) - [Texas Capital Government Mny Mkt ETF (MMKT.US)](https://longbridge.com/zh-HK/quote/MMKT.US.md) - [Financial Select Sector SPDR Fund (XLF.US)](https://longbridge.com/zh-HK/quote/XLF.US.md) - [Cboe Global Markets (CBOE.US)](https://longbridge.com/zh-HK/quote/CBOE.US.md) - [Fidelity MSCI Financials Index (FNCL.US)](https://longbridge.com/zh-HK/quote/FNCL.US.md) ## 相關資訊與研究 - [Fed Making Hawkish Pivot, BlackRock's Rosenberg Says](https://longbridge.com/zh-HK/news/279670459.md) - [Fed votes to hold rates steady, notes 'uncertain' impacts from Iran war](https://longbridge.com/zh-HK/news/279649197.md) - [US-based StoneX proposes $320 million acquisition of London-listed CAB Payments](https://longbridge.com/zh-HK/news/279223819.md) - [INSTANT VIEW-Fed holds rates steady as expected, calls inflation somewhat elevated](https://longbridge.com/zh-HK/news/279649628.md) - [Bank of America Executive Sells Shares](https://longbridge.com/zh-HK/news/279096295.md)