Will the Fed cut interest rates? Here’s what to expect at Wednesday’s meeting.

The upcoming Federal Reserve meeting is set to take place on Wednesday, where officials will address the challenging economic landscape characterized by rising inflation, a sluggish job market, and the impending departure of Jerome Powell as chair.

Economists widely anticipate that the Federal Open Market Committee (FOMC) will maintain the current target rate within the range of 3.5% to 3.75%, according to the CME Group’s FedWatch tool. This would mark the third consecutive meeting in which the Fed has opted to keep rates unchanged as it navigates the economic repercussions of ongoing geopolitical tensions, such as the Iran war, which have led to a surge in energy prices and inflation.

Goldman Sachs economists predict that the FOMC will reiterate a cautious approach at the April meeting due to the uncertain economic outlook stemming from the geopolitical conflicts. Additionally, Powell is expected to conclude his tenure as Fed chair in May, with Kevin Warsh poised to succeed him pending confirmation. Warsh’s nomination faced initial obstacles related to an investigation into Powell over the renovation of the Fed’s headquarters, but recent developments indicate progress towards his confirmation.

Looking ahead, economists forecast a potential rate cut later in 2026, with EY-Parthenon suggesting a single cut in December amid heightened inflationary pressures. However, Moody’s Analytics chief economist Mark Zandi remains skeptical of any rate cuts this year, citing the central bank’s dilemma in responding to evolving economic conditions and uncertainty.

The Fed’s dual mandate of managing inflation and promoting full employment will guide its decision-making, with a delicate balance required to support the labor market while containing inflationary pressures. The upcoming meeting will provide insights into the Fed’s stance on interest rates and its outlook for the economy, with Powell expected to address these issues during a press conference following the rate decision announcement.

As the Fed prepares for its third rate decision of 2026, the economic landscape remains complex and uncertain, with policymakers facing challenges in balancing competing priorities. The outcome of the meeting will have implications for financial markets, businesses, and consumers, shaping the trajectory of monetary policy in the months ahead.