The Federal Open Market Committee voted 11-1 to keep the benchmark federal funds rate anchored in a range between 3.5%-3.75%. The Fed left the federal funds rate steady at the 3.5%–3.75% target range for a 2nd consecutive meeting in March 2026. But rate expectations for next year tell a different story, with multiple Fed rate markets showing dramatic reversals.

The April 2027 "Above 1.00%" market rocketed from 19¢ to 97¢—a 78¢ move that suggests traders now expect rates to stay substantially higher for longer. One factor is the uncertainty associated with the war with Iran that started nearly three weeks ago. The fighting and its impact on the Strait of Hormuz has roiled the global oil market and threatened to keep inflation above the Fed's 2% target. Meanwhile, the "Above 0.00%" market collapsed 69¢ to 29¢, signaling the era of near-zero rates feels increasingly distant. This hawkish repricing extends across multiple rate thresholds, with markets now pricing significantly tighter policy through 2027.