In a Matter of Hours, the World Could Change Completely: These Are 5 Signals from the Fed
Jakarta, CNBC Indonesia - Global market participants are awaiting the outcome of the Federal Open Market Committee (FOMC) meeting of the United States Federal Reserve (the Fed), to be announced in the early hours of Thursday Indonesian time at 01:00 WIB, specifically following the March 17-18, 2026, meeting.
In addition to the interest rate decision, markets are also waiting for the latest signals on the direction of US monetary policy going forward, particularly amid the surge in global energy prices due to the conflict in the Middle East and the beginning of a slowdown in the US economy.
The Fed’s decisions are always a primary focus for global financial markets due to their significant influence on US dollar movements, global capital flows, bond yields, and exchange rates in developing countries.
This week’s meeting is particularly crucial as it is taking place amid the escalating Iran versus Israel-US war. The war has caused oil prices to soar and raises concerns about fuelling US inflation. This is the critical point for the Fed.
With its primary task of controlling inflation, the Fed’s decision will be highly determinative for the US and the world. After all, the Fed is the central bank of the superpower US, so its policies will greatly shape the world, especially in financial markets.
Similar to the decision last January. In the January 2026 meeting, the Fed indeed held interest rates steady.
According to the CME FedWatch Tool, 98.9% of market participants are confident that the Fed will hold its benchmark interest rate at 3.50%-3.75% in this meeting. It will greatly depend on economic data developments.
This is similar to the decision last January. In the January 2026 meeting, the Fed maintained interest rates at that level while emphasising that the next steps would greatly depend on economic data developments.
Here are some of the key aspects that market participants are most closely watching ahead of tonight’s Fed announcement:
- Interest rates
The market’s primary attention remains on the interest rate decision. In general, market participants expect the Fed to hold its benchmark interest rate steady in the 3.50%-3.75% range again.
However, what is more important for the market right now is not just tonight’s decision, but the direction of policy thereafter. After all, the Fed is facing a challenging situation.
On one hand, inflationary pressures have indeed eased, but they have not fully dissipated. US consumer inflation in February 2026 was recorded at 2.4% year-on-year, while core inflation remains at 2.5%. Meanwhile, the inflation measure more closely watched by the Fed, PCE, is still at 2.8% and core PCE at 3.1% in January 2026.
This situation leaves limited room for rate cuts in the near term. Yet at the same time, there is not yet sufficient reason to raise rates again.
The situation is further complicated by the rise in energy prices due to the war in the Middle East, which risks stalling the decline in inflation. Therefore, some market participants are beginning to assess that the Fed may hold rates steady for longer than initially expected.
This view aligns with Goldman Sachs’ projections, which estimate that rate cuts will only begin in September 2026, delayed from the previous forecast of June.
- Latest economic projections
In addition to the interest rate decision, market participants are also awaiting updates to the Fed’s economic forecasts. In this March meeting, the US central bank will release its latest projections on economic growth, inflation, and unemployment rates.
In the last projections released in December 2025, the Fed estimated US economic growth at 2.3% for 2026. Meanwhile, the unemployment rate is projected at 4.4%. On the price side, PCE inflation is estimated at 2.4% and core PCE at 2.5%.
However, since those projections were released, economic conditions have changed. Growth has begun to slow, the labour market is not as strong as before, and the risk of rising energy prices has re-emerged due to the Middle East conflict.
Therefore, the market is now waiting to see whether the Fed will cut its growth forecasts, raise its inflation projections, or do both simultaneously.
- Dot plot
In addition to the interest rate decision, market participants are also keenly awaiting the Fed’s dot plot.
The dot plot is important because it is from here that market participants try to gauge how much room the Fed is leaving for rate cuts, not only for this year but also for the years ahead.
In the December 2025 FOMC dot plot, 19 Fed members provided their projections. For 2026, the picture shows that the Fed officials’ views remain very cautious.
Only one member indicated the need for further rate cuts, while the majority of others tend to see rates remaining at relatively high levels.
Therefore, in this FOMC meeting, the market will look to see whether the latest dot plot still shows the same cautious stance as in December 2025, or provides a different signal, including the possibility of rates being held steady for longer or even opening the door for rate hikes if inflation threats grow again due to surging energy prices amid the war.
- Fed statement
The official Fed statement will also be a major focus because the market wants to read whether the US central bank is now emphasising inflation risks more or starting to worry more about economic slowdown.
The surge in oil prices that briefly broke through US$100 per barrel due to the Middle East conflict has strengthened concerns about renewed price pressures. Therefore, even small changes in the wording of the Fed’s statement could significantly determine the direction of the US dollar, US government bond yields, and risk assets.
- Jerome Powell’s press conference
After the decision is announced, market attention will immediately shift to Fed Chair Jerome Powell’s press conference.
According to the Fed’s official calendar, the FOMC results are scheduled to be released at 2:00 p.m. local time