FOMC Decision Summary
The Federal Open Market Committee (FOMC) voted unanimously to hold the Federal Funds Rate at 4.50-4.75% at its March 2026 meeting, in line with market expectations. The decision itself was widely anticipated — what moved markets was the updated dot plot and Chairman Powell's press conference.
The Dot Plot Revision
The dot plot — a chart showing where each Fed member expects rates to be at year-end — showed a shift toward fewer cuts in 2026 compared to the December projection:
- December 2025 projection: 3 cuts of 25bps each in 2026 (year-end rate: 3.75-4.00%)
- March 2026 projection: 2 cuts in 2026 (year-end rate: 4.00-4.25%)
This hawkish revision was the key catalyst for market moves.
Immediate Market Reaction
USD: The DXY initially spiked to 105.80 but reversed sharply during Powell's press conference as he emphasised data dependency and dismissed concerns about stagflation.
EUR/USD: Fell to 1.0812 on the initial dot plot release, then recovered to 1.0855 by end of day as dollar strength faded.
Gold (XAU/USD): Dropped to $2,285 on the hawkish dot plot, recovered to $2,310 by session end. Gold's resilience suggests strong underlying demand.
US Equities (US500): Initial sell-off to 5,155, recovered to 5,210. The market interpreted Powell's tone as "not as hawkish as feared."
US Treasuries: 10-year yield initially rose to 4.45%, settled at 4.38%.
Powell's Key Statements
"We are committed to returning inflation to 2%. We are well-positioned to wait for further clarity before making adjustments."
"The labour market remains solid. We are not seeing the weakening that would justify faster rate cuts."
"We are mindful that cutting too early or too aggressively could allow inflation to re-accelerate."
Implications for Traders
Dollar: The Fed's "higher for longer" stance continues to provide a floor under the USD. Major pairs like EUR/USD face structural headwinds unless the ECB turns more hawkish or US data deteriorates sharply.
Gold: The Fed reaction showed gold's resilience. The precious metal is being supported by central bank buying and geopolitical risk — not just rate expectations. The gold bull case does not require an aggressive cutting cycle.
Risk assets: Equities shrugged off the hawkish dot plot, suggesting the market has already priced in a "soft landing." Watch for any weakening in labour market data as the trigger for a more significant risk-off move.
Next Key Events
- April 10: US CPI — critical for confirming or denying the inflation narrative
- May FOMC: First meeting at which a cut could plausibly occur given current data
- Q1 GDP (April 30): First reading on 2026 growth
*This analysis is for informational purposes only and does not constitute financial advice.*