Fed Keeps Rates Steady Amid Cautious Outlook, Rising Costs

The Federal Reserve kept key rates unchanged after Board and Reserve Bank directors met on Feb. 9 and March 18, 2026, according to minutes released by the Board. All 12 Reserve Banks voted to maintain the primary credit rate at 3.75%.

At the March 18 joint session with the Federal Open Market Committee, officials left the federal funds target range at 3.5%–3.75% and approved an interest on reserve balances rate of 3.65%.

Board officials reported that most Reserve Bank districts described economic conditions as stable. Labor markets showed limited hiring, low turnover and modest wage gains, while several districts said employers had difficulty filling specialized roles, particularly in healthcare.

Directors reported continued business investment in technology and artificial intelligence to boost efficiency, and noted that AI’s direct effect on employment has been limited so far.

Tariff-related price pressures had eased compared with earlier periods, but several districts reported rising nonlabor input costs in healthcare services and energy. Those higher costs were cited as contributing to cost pressures for businesses and consumers.

The Board renewed existing formulas for secondary and seasonal credit programs and left the secondary credit rate at 4.25%, which is 50 basis points above the primary credit rate.

Voting at both meetings was unanimous among Chair Jerome Powell, Vice Chair Philip Jefferson and the governors who attended. Governors Christopher Waller and Stephen Miran were absent for the Feb. 9 meeting and took part in the March 18 session.

The minutes state officials opted not to lower rates because inflation risks remain and recent cost developments could sustain price pressures. The Federal Reserve said it will monitor upcoming inflation readings to decide if policy changes are warranted.

Markets have priced in the possibility of rate cuts later in the year. The Fed uses the discount rate and the federal funds target to influence borrowing costs and the broader economy; leaving those rates unchanged maintains a restrictive policy stance while officials assess labor and price data.