Federal Reserve statement explained – March 2026

As the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) met Wednesday to decide the future path of the federal funds rate, the world outside the room did its best to complicate its decision to hold the target for the federal funds rate from 3.5% – 3.75%.

But what does it all mean for mortgages? And where do officials see things headed?

What this means for mortgages

The federal funds rate remaining neutral means mortgage rates should stay stable, right? In theory, yes. In practice, the market’s in control. We’ll get into this in more depth below, but mortgage bond traders have an unusual number of things to keep an eye on. While the Fed is important, it’s just one input in a larger-than-usual decision matrix.

There’s also a timing aspect to this. Because mortgages are sold on the secondary market, mortgage pricing today is typically based on what traders expect the rate to be 60 days from now. This means any movement one way or the other is already priced in. For this reason, waiting on the Fed doesn’t always make sense.

The one time you might see market movements is if the traders are surprised by the direction or magnitude of the Fed’s move. While that hasn’t happened very much in recent memory, it’s always possible in times of increased uncertainty. Because markets move fast, it’s a good idea to stay on top of rates whether you’re buying or doing a refi.

If you’re not ready yet, that’s okay. Try not to focus so much on the rate as on whether the payment fits into your monthly budget and helps you accomplish your homeownership or financial goals. The rate always matters, but there’s nothing stopping you from refinancing in the future if rates drop.¹

And while rates have been up in recent weeks, they’re not far from where they were a month ago, according to the Freddie Mac Primary Mortgage Market Survey^®. Everything is cyclical.

If you like what you see and are ready to get started, you can apply online.

Future projections

Every quarter, the Fed releases its projections for where the federal funds rate is going to be in the short, medium, and long term. The current median projection is 3.4% for 2026. The range is anywhere between 3.1 and 3.6%, depending on who’s being asked. This shows that there’s a level of uncertainty on the Committee.

The committee did point specifically to concerns in the Middle East in its press release.

Economic conditions

The monetary policy objectives of the Fed align around two key goals: setting the conditions for maximum employment and maintaining price stability.

It’s a difficult job under normal circumstances, as these priorities often conflict. Lower interest rates that often lead to lower unemployment levels can generate higher inflation. But elevated interest rates that tamp down inflation can lead to more people being put out of work. So the Fed is constantly trying to balance finicky scales.

The primary tool the Committee uses to monitor the health of the economy is hard economic data. Keying on the theme of labor and inflation, let’s look at some of the key reports officials look at.

Employment numbers figure prominently in the Committee’s considerations. In February, the unemployment rate was up 0.1% at 4.4%. More concerning was the decline of 92,000 in nonfarm payrolls in February. Healthcare employment was down due to labor strikes, along with drops in information and federal employment. It’s one month, but it could be worth keeping an eye on.

The other side of the equation is inflation. The Fed has a few reports to pick from. Its favorite is the Personal Consumption Expenditures Index (PCE) from the Bureau of Economic Analysis. The latest PCE reading showed that prices were up 2.8% since last January. While it was down slightly from December, it’s well above the Fed's 2% target.

The Bureau of Labor Statistics puts out the Consumer Price Index (CPI) and Producer Price Index (PPI). While CPI reflects the environment for consumers now, PPI tends to reflect the future because producers often pass increased costs onto consumers eventually.

The CPI showed that prices increased 2.4% compared to February of last year, remaining level with the January to January increase. However, PPI was up 0.5% overall and has risen 3.4% since last February, so there are some signs that the Fed may continue to see inflation as problematic.

Beyond the reports, one of the challenges the Fed faces routinely is that all the data is backward-looking. Because the hostilities between Israel and Iran drew the U.S. in on February 28, the reports don’t reflect that the price of oil is up more than 40% since that time.

According to AAA, the average price for a gallon of gas nationwide right now is just over $3.84. It’s gone up because access to the Strait of Hormuz, a key oil shipping lane, remains cut off by the conflict. Because it’s key in the transportation of all manner of goods and services, this increase in gas prices could also bump up inflation.

While there’s no predicting the future, you can keep an eye on mortgage rates and determine the right time for you to make a move. Sign up for rate alerts.

¹ Refinancing may increase finance charges over the life of the loan.