The Federal Reserve’s March 17–18, 2026 FOMC minutes showed that policymakers were dealing with a more uncertain environment than at the start of the year. The economy was seen as expanding at a solid pace, and the federal funds rate remained in the 3.5% to 3.75% range, but inflationary pressures have picked back up, driven in part by higher energy prices tied to tensions in the Middle East. There was also a noticeable shift in how the Committee viewed the labor market. In January, the tone had been more about stabilization; by March, there was greater concern that conditions could weaken if the economy faced additional headwinds. The debate over interest rates had also shifted. While many still expected eventual rate cuts, some officials argued that the door must remain open for rate hikes given the sticky inflation. Taken together, these developments seem to be pushing the Fed toward a more cautious, meeting-by-meeting approach as it weighs the risk of more persistent inflation against a wider range of possible outcomes.

The BEA's third estimate for Q4 real GDP reported an annualized growth rate of 0.5% (revised down from the 0.7% second and 1.4% advance estimates, and below Q3's 4.4%). Consumer spending and investment remained the primary growth drivers, though both were slightly softer than previously estimated, with real final sales to private domestic purchasers rising 1.8% (vs. 1.9% prior). Government spending (-5.8%) and trade weighed on growth, as exports fell 3.3% and imports (a GDP subtraction) decreased 1.1%. Industry gains were concentrated in services-producing sectors (+2.3% real value added), particularly wholesale trade, information, and health care and social assistance, while private goods-producing industries declined 1.8%. The gross domestic purchases price index increased 3.7% (revised from 3.8%), while the PCE price index (2.9%) and core PCE excluding food and energy (2.7%) were unchanged from prior estimates.

The U.S. Bureau of Labor Statistics reported that the Consumer Price Index rose 0.9% in March on a seasonally adjusted basis, following a 0.3% increase in February. The all items index increased 3.3% over the past 12 months before seasonal adjustment, up from a 2.4% annual gain in February. March’s increase was driven by a 10.9% jump in the energy index, led by a 21.2% surge in gasoline prices, which accounted for nearly three-quarters of the overall monthly rise. The food index was unchanged, as a 0.2% decline in food at home offset a 0.2% increase in food away from home. The shelter index also continued to rise, advancing 0.3% in March. Core CPI (all items less food and energy) increased 0.2% for the month and rose 2.6% over the past year, up slightly from 2.5% in February. On a year-over-year basis, notable increases were seen in airline fares (+14.9%), household furnishings and operations (+4.0%), medical care (+3.1%), and recreation (+2.2%). Over the same period, food prices rose 2.7% and the energy index increased 12.5%.