Fed's Dot Plot May Signal No Rate Cut in 2026, Macquarie Says as Policy Meeting Kicks Off

12:39 PM EDT, 03/17/2026 (MT Newswires) -- The Federal Reserve's so-called "dot plot" may signal no interest rate cut this year amid inflationary pressures that are likely to intensify due to the ongoing Iran war, Macquarie Group said in a note e-mailed Tuesday.

The Federal Open Market Committee kicked off its two-day policy meeting today, with interest rates widely expected to be left unchanged for a second consecutive meeting. Along with a decision on interest rates, the Fed is scheduled to publish its Summary of Economic Projections document.

With a surprise move unlikely, Macquarie said the focus is on the Fed's economic projections that include the dot plot, which anonymously shows individual members' expectations regarding monetary policy. Markets would also be tracking any changes to the policy statement's language and Chair Jerome Powell's post-meeting remarks.

The dot plot could imply no rate cut this year, Macquarie Head of Economics David Doyle said.

The scatter chart in December indicated one 25-basis-point rate cut in 2026 and another in 2027, according to Doyle. The FOMC delivered three back-to-back rate cuts last year, before pausing in January, citing stabilization in the labor market and elevated inflation.

"Already in December, (seven) of 18 participants had submitted projections with either no change in rate or a hike," Doyle wrote. "Should (three) more participants move to this view, it would remove the projected cut for 2026."

Data showed last week that annual consumer inflation in the US held steady in February, before energy prices began surging in the wake of the US-Israel strikes on Iran. Crude prices have surged about 40% since the war broke out as the crucial Strait of Hormuz remains effectively closed, disrupting supplies.

"Prior to the current oil price spike, inflationary pressures were already showing greater persistence than the committee had been anticipating," Doyle said. "Given this, future guidance may shift in a hawkish direction."

Macquarie expects headline and core inflation estimates, based on the personal consumption expenditures index, to be upgraded, reflecting higher oil prices. Central bank officials in December pegged core PCE growth at 2.5% for 2026.

The firm expects the Fed's next move to be an interest rate increase, possibly in the first half of 2027. It previously projected a hike in the fourth quarter of this year.

The firm pushed out the timing of a rate hike given "more mixed signals from the labor market and the potential for consumer headwinds near-term from higher oil (prices)."

In a note sent Monday, UBS Securities said that the Fed's updated economic projections will likely continue to signal one rate cut in 2026.

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