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The Federal Reserve continued its pause on rate reductions, holding the short-term federal funds rate from 3.5% to 3.75%, the level set in December 2025.
The Fed stated “uncertainty about the economic outlook remains elevated” and “the implications of developments in the Middle East for the U.S. economy are uncertain,” while emphasizing it is committed to supporting maximum employment and returning inflation to 2%.
The National Association of Home Builders (NAHB) adjusted its forecasted rate cuts from additional cuts in 2026 to one due to higher inflation pressure related to factors like increased oil prices due to the Iran war, according to an NAHB Eye on Housing post.
The Fed’s outlook, based on the updated Summary of Economic Projections (SEP), indicates an improved economic growth outlook, with a 2.4% year-over-year growth rate in the fourth quarter of 2026, upwardly revised from December’s projection of 2.3%.
