Bloomberg Surveillance Instant Reaction: The Fed Decides
Mar 18, 2026
Bob Michael, J.P. Morgan asset management executive, discusses emerging markets and FX moves. Diane Swank, KPMG chief economist, analyzes inflation, labor markets, and stagflation risks. Richard Clarida, former Fed vice chair, explains Fed decision-making, oil and geopolitical pressures, and succession uncertainty. They debate market reactions, policy interpretation, and global spillovers in short, sharp segments.
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Dovish Hold With Higher Inflation Forecasts
- The Fed held rates and kept the median dot unchanged, signalling one cut in 2026 despite lifting near-term inflation forecasts.
- Policymakers raised PCE and core PCE for 2026 to 2.7% while keeping the implied rate path steady at the December median dot.
Markets See Fed Looking Through Oil Shock
- Markets view the Fed as willing to look through a near-term oil-price inflation shock and remain on hold.
- That view steepened the yield curve and lifted 10-year yields as investors price in a Fed that tolerates temporary inflation moves.
Former Fed Official Calls Decision Dovish But Uncertain
- Richard Clarida called the decision dovish and noted uncertainty from geopolitical risk, while pointing to oil futures that suggest the shock dissipates.
- He emphasized the baseline is dovish constructive but that nobody, including the Fed, truly knows the path amid elevated risk.