The Fed flagged growing concern over the “very, very low” level of job creation.
Deepak Agrawal,
CIO-Debt,
Kotak Mahindra AMC
Mumbai, March 19, 2026: The Federal Open Market Committee (FOMC) held its meeting on March 18, 2026, and decided to keep the federal funds rate unchanged at a range of 3.5% to 3.75%. The decision was supported by all committee members, except Governor Miran, who preferred to lower the target range by 25 basis points. Policymakers reinforced a data‑dependent, meeting‑by‑meeting approach. While the dot plot continues to project two potential rate cuts ahead, Chair Jerome Powell emphasized that these are conditional rather than assured, making the Fed’s message hawkish at the margin. Inflation is still expected to ease over the course of the year, but Powell acknowledged that progress has slowed compared with earlier expectations, with tariff‑related pressures and rising energy prices posing near‑term upside risks. At the same time, the Fed flagged growing concern over the “very, very low” level of job creation, noting that after adjusting for overcounting, there has been virtually zero net private‑sector job growth over the past six months. Geopolitical uncertainties, including the unclear impact of the US‑Iran conflict, further complicate the outlook and raise risks to both inflation and growth. In this environment, the bar for rate cuts has clearly risen, as the Fed balances downside risks to employment against upside risks to inflation. Markets have reflected this cautious policy stance, with bonds remaining range‑bound, while equities and precious metals sold off amid heightened inflation concerns and reduced confidence in near‑term policy easing.
Mr. Nachiketa Sawrikar Boston USA based fund manager of the Rs 900 crore Artha Global Multiplier fund, states:
"The FOMC meeting came at a time when inflation pressures are rising again, even before the full impact of the recent Iran conflict is reflected in the data. While the labor market remains relatively stable, there are emerging signs of weakening. This combination is not conducive to near-term rate cuts.
