Will the Fed increase interest rates by 25+ bps after the March 2026 meeting?

Reasoning

All available evidence strongly suggests the Fed is in an easing cycle, not a tightening cycle. The Fed cut rates three times in 2025, and projections indicate at most one cut in 2026. The CME FedWatch tool shows only a 2.7% chance of a rate cut at the March 2026 meeting, suggesting rates are expected to hold steady. There is no credible evidence suggesting a rate hike is being considered. The baseline probability of a hike is extremely low (0.05%), and while I'm adjusting slightly upward from baseline due to some uncertainty around geopolitical factors (Iran war oil shock mentioned) and inflation risks, a rate increase remains highly unlikely. The Fed's current trajectory is toward neutral or lower rates, not higher.

Key Factors

• •Fed has been in easing cycle with three 2025 cuts
• •2026 rate path described as 'very unclear' but leaning toward holds or cuts
• •CME FedWatch shows only 2.7% chance of any rate change at March 2026 meeting
• •Fed officials project only one cut in 2026, not hikes
• •Geopolitical risks (Iran war) could affect inflation but not enough to trigger hikes
• •No evidence of inflationary pressures severe enough to warrant rate increases