FED HOLDS RATES STEADY AMID RISING ENERGY PRICES

The following information was released by the Association for Manufacturing Technology (AMT):

by Kristin Bartschi

Mar 18, 2026

McLean, Va. (March 18, 2026) The Federal Reserve opted to keep interest rates steady today at a target range of 3.5% to 3.75% in a move that was widely anticipated by financial markets. The quarterly summary of economic projections showed that the members of the committee see both higher growth and inflation than they expected at the December meeting. 2026 growth expectations rose by one-tenth to 2.4% on expectations of rising levels of productivity. Forecasts of both PCE and core PCE inflation increased to 2.7% in 2026, up by 0.3 and 0.2 percentage points, respectively. Estimates of the longer-run interest rate, a proxy for the neutral rate, increased by 0.1 percentage points to 3.1% from the December forecast.

"Stabilization near the neutral rate reduces the financial risk of large capital investments. Manufacturers who rely on large capital purchases can more confidently make those investments in a more stable interest rate environment," said Christopher Chidzik, principal economist of AMT The Association For Manufacturing Technology. "Increases in inflation expectations could negatively affect consumer spending. Despite this, investment in manufacturing technology should remain buoyed above choppy consumption patterns because of large aerospace backlogs, investments in energy infrastructure, and the growing need for military production amid the ongoing war with Iran."