Powell’s language in March was more guarded than usual, which is saying something for a Fed chair. He said the economy has been expanding at a solid pace, but also that the committee “didn’t make progress” on inflation (Federal Reserve transcript, March 18, 2026). Those are not the words of a central bank getting comfortable.

He also made clear that policy is still data-dependent, not pre-scripted. “If we don’t see that progress, then you won’t see a rate cut,” he said (Federal Reserve transcript, March 18, 2026). That line did a lot of work. It told markets the Fed is still willing to wait, but not willing to pretend inflation has settled into place.

The shift in market thinking has been fast. Earlier this year, traders were looking for cuts in June and September. By March 12, CNBC reported that the September cut had been priced out too, leaving just one quarter-point cut in December. By this week, the conversation had changed from “how many cuts?” to “how long can the Fed sit tight?”

That does not make a hike imminent. It does mean the Fed’s next move on interest rates is being judged in a very different frame than it was three months ago.

Inflation is doing the damage here. The Fed said estimates based on consumer price data showed total PCE prices rose 2.8% over the 12 months ending in February, while core PCE rose 3.0% (Federal Reserve transcript, March 18, 2026). The median SEP projection for total PCE inflation this year was also revised up to 2.7%, a bit higher than in December (Federal Reserve transcript, March 18, 2026).

That is still a long way from the Fed’s 2% target. Powell said a big slice of core inflation, between half and three-quarters, is tied to tariffs, and that the committee is waiting for progress there (Federal Reserve transcript, March 18, 2026). Governor Bowman made a similar point in January, arguing that if estimated tariff effects were removed, core PCE would have been close to 2% in recent months (Federal Reserve speech, January 16, 2026).

That is the dovish case in one sentence. If tariffs are a one-time price shock rather than a rolling inflation machine, the Fed has room to wait. If not, the pressure to stay restrictive, or even tighten, gets heavier.

Recent data did little to calm that debate. MarketMinute reported on March 19 that hotter-than-expected February PPI data had knocked down the idea of a smooth glide back to target. The market response was immediate. Sticky inflation and Fed policy stopped being an abstract theme and turned back into a price action story.

Energy is making the picture messier. Powell said near-term inflation expectations had moved up in recent weeks, which he linked to higher oil prices caused by supply disruptions in the Middle East (Federal Reserve transcript, March 18, 2026). He also said the question of whether the Fed can look through energy inflation does not really arise until it has checked the tariff box first (Federal Reserve transcript, March 18, 2026).

That is a subtle but important distinction. A Fed that sees core inflation at 3%, tariffs still feeding prices, and oil adding heat has little reason to rush. One cut is still in the official projection. A hike is not the plan, but it is no longer unthinkable if inflation refuses to cool.

Treasury yields have been taking the same message from the market, only faster. The 10-year Treasury yield rose from 3.97% in late February to 4.28% by March 12, according to MarketMinute on March 13, and then to 4.29% by March 19, MarketMinute reported that week.

That kind of move matters because bond markets tend to front-run the Fed rather than wait for it to catch up. Seeking Alpha reported on March 15 that rising 5-year breakeven inflation and narrowing SOFR spreads were pointing to fewer cuts in 2027, and in some cases the removal of 2026 cuts altogether. This is what repricing looks like in real time. Less relief, more caution, higher for longer.

There is also a geopolitical layer, and it is not small. Powell said the implications of Middle East developments for the U.S. economy are uncertain (Federal Reserve transcript, March 18, 2026). MarketMinute argued on March 13 that the supply shock could turn inflation more structural. That is a strong claim, and the Fed has not endorsed it. But it does help explain why Treasury yields on Fed rate hike bets have moved the way they have.

One other risk has started to hover over the discussion, even if it is not central to the current policy path. Inflation.Live wrote on March 25 that if markets perceive the Fed as compromised by political pressure, monetary-policy risk turns into a credibility problem and investors reprice inflation expectations, real yields, and term premia in unpredictable ways. The Fed is nowhere near that scenario as a baseline. Still, markets do not need much encouragement to get twitchy.

The Fed’s official guidance is less dramatic than the market chatter. The median participant still projects the federal funds rate at 3.4% at the end of this year, which implies one quarter-point cut from the current range, and that forecast was unchanged from December (Federal Reserve transcript, March 18, 2026). On paper, then, the committee still leans toward a small amount of easing.

Powell was careful to limit how much confidence anyone should place in that projection. The SEP is not a committee plan, he said, and the dots are conditional on the economy behaving as expected (Federal Reserve transcript, March 18, 2026). That is Fed-speak for: do not build a house on this.

The January minutes point in the same direction. Market-based measures of policy expectations were still showing one to two 25-basis-point cuts this year, while the Desk survey continued to point to two cuts (Federal Reserve minutes, February 18, 2026). Since then, futures pricing has been pared back sharply. CNBC reported that traders had dropped a September cut and were left with only one cut in December.

The hawkish edge is still mostly a risk, not a forecast. But MarketMinute reported on March 19 that some officials were even talking about the possibility of a hike if inflation fails to cool. That sits at the far end of the distribution. It also tells you how the debate has changed. A few months ago, the argument was over how fast the cuts would come. Now it is over how long the Fed can resist moving at all.

A hike would require more than stubborn inflation. Core prices would need to reaccelerate, or inflation expectations would need to lose their anchor. Powell said long-term expectations have remained solid across markets, surveys, and forecasters, which is one reason the Fed still has room to wait (Federal Reserve transcript, March 18, 2026).

The next few months matter a great deal. The obvious checkpoints are CPI, PCE, and oil prices, along with whatever the tariff data says about how persistent the price pressures really are. If core PCE starts moving back toward 2.5% or lower, the December cut gets more plausible and the hike talk fades again. If it stays around 3% or edges higher, the Fed will face a harder choice: keep rates where they are and call it patience, or admit that a hold has become a form of tightening.

MarketMinute said on March 19 that if the data confirms the PPI trend, the Fed may be forced into a restrictive hold through the end of 2026. That remains the most plausible hard-money outcome. It is not a hike. But it is close enough to keep the question alive.

So the answer to will the Fed raise interest rates again is this: not soon, not unless inflation surprises on the upside again, and not unless the Fed decides its credibility is worth more than a little extra pain for growth. For now, the central bank is trying to wait out the mess. The next CPI and PCE prints will tell whether that patience is rewarded, or whether the whole discussion moves one notch higher.