In the early morning of March 19 Beijing time, the Federal Reserve announced its March interest rate decision, keeping the benchmark rate steady in the range of 3.50%–3.75% for the second consecutive meeting, in line with market expectations. The vote passed 11–1, with only one member supporting a rate cut.

For the first time, the Fed’s statement included language noting uncertainty over the economic impact of the Middle East situation, while raising its inflation and growth forecasts. Chair Jerome Powell made clear that the Fed would not cut rates until inflation shows further improvement, and even mentioned that officials had discussed whether further rate hikes might be needed, sending a strong hawkish signal. The dot plot still projected one rate cut in 2026, but fewer officials now support easing, sharply reducing market bets on cuts this year.

In response, all three major U.S. stock indexes closed sharply lower, with the Dow falling more than 760 points, its worst daily drop this year. The U.S. dollar index rebounded above 100, and U.S. Treasury yields rose. Institutions believe that high oil prices combined with sticky inflation have forced a delay in the Fed’s policy shift, renewing expectations of tighter global liquidity and putting pressure on risky assets in the short term.