CB Views: March 2026 FOMC Preview

Scenario 

Probability 

Assessment

Dovish Pause

35%

• The only real difference between a dovish and a neutral pause outcome is how chair Powell frames the expected impact of the oil price shock. If it is characterized as “temporary” enough that the Fed can “look past” it (as long as inflation expectations remain anchored), and that policy is still “mildly” restrictive and thus the rates normalization is not over, this would likely constitute as a dovish lean.

Neutral Pause

Base-Case

55%

• Statement: We think that the Fed will highlight the new risks that have surfaced with the onset of the Middle East conflict, and that they will need to see more data to assess the full impact that higher oil prices will have on the economy.
• SEP Forecasts: Given the renewed tensions to the balance of risks between inflationary pressures and weak labor market prospects, it's likely that the SEP forecasts see minor changes to unemployment and growth, though there is a risk of an uptick in headline inflation estimates. The median rate dots are expected to remain at only 1 cut for 2026 and for 2027, to avoid signaling a shift in expectations.
• Presser: We expect chair Powell to deliver a balanced message while acknowledging that they are stuck between what we see as a crude oil reality and a jobless place.

Hawkish Pause

10%

• Our lowest probability scenario is the hawkish pause as we doubt that the Fed wants to rattle financial markets at this delicate time. That said, if there is an emphasis that the oil shock further complicates the inflation trajectory given that is has been above 2% for well over 5 years, this would likely constitute as a hawkish outcome.