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pred-2026-03-19-038

The FOMC's March 2026 SEP will show the median federal funds rate projection for end-2026 BELOW 3.75% (implying more than 2 cuts from 4.25–4.50%), AND the median 2026 PCE inflation projection will be REVISED DOWNWARD or held flat at or below 2.5%, NOT revised upward.

resolved · correct tier 1 economic political monetary-policy institutional
confidence 0.260
created
2026-03-19
resolves
2026-03-20
resolved
2026-03-20
outcome
0
brier
0.0676
base rate
0.32
meta-confidence
medium
Evidence for (7)
  • YoY PCE inflation trending downward from peak 2024 levels; January-February 2026 data shows continued moderation toward 2.5% range, reducing impetus for upward revision
  • Fed funds futures market as of mid-March 2026 pricing in 4-5 rate cuts over 2026, implying terminal rate below 3.75%, suggesting market expects more dovish SEP than original prediction
  • Recent labor market data showing signs of softening (initial jobless claims trending up from cycle lows), providing Fed justification for more accommodative stance than December baseline
  • Core inflation ex-volatile sectors showing more benign trajectory, reducing argument for inflation upside revision
  • Financial conditions have tightened since December 2025, potentially prompting Fed to project more cuts to support economic activity
  • Historical pattern: SEP projections often move more dovish when economic data softens between meetings; December SEP may have been at peak hawkishness
  • Original prediction's 74% confidence still leaves 26% model uncertainty; markets have repriced expectations significantly since December
Evidence against (7)
  • Sticky core PCE inflation remains above 2.0% target, justifying cautious stance on cuts
  • Labor market unemployment rate still near cycle lows (below 4.2%), supporting case for fewer cuts
  • Fed Chair Powell's recent communications suggest gradual, measured approach to rate cuts rather than aggressive hiking
  • Fed has repeatedly emphasized data-dependence; single month of moderation may not shift entire year projection
  • Goods inflation and shelter costs remain structural headwinds that could reverse recent disinflation
  • Fed credibility on inflation fighting demands maintaining relatively restrictive policy stance
  • Markets may be pricing in recession scenario that Fed does not endorse; official projections may be more cautious than futures market

Reasoning chain

The original prediction assumes sticky inflation and limited rate-cut room based on December baseline conditions. However, three dynamics undermine this: (1) Disinflation has accelerated faster than December consensus expected—PCE is now tracking back toward 2.5% levels the Fed was projecting for year-end 2026, eliminating upward revision basis. (2) Labor market softening between December and March provides Fed new justification for more cuts; initial jobless claims have trended up and labor force participation remains weak. (3) Fed funds futures have completely repriced expectations since December—the market is now pricing 4-5 cuts, not the 2 implied by 3.75-4.00% terminal rate. While December SEP was arguably at peak hawkishness, March data suggests inflation moderating faster than expected and growth slowing, shifting both rate and inflation projections downward/lower. The original prediction relies on sustained inflation stickiness and labor market strength both holding firm through March; evidence for both has weakened.

Falsification criteria

Release of FOMC SEP data on 2026-03-19 will show: (1) median federal funds rate projection for end-2026 at or below 3.75%, AND (2) median PCE inflation projection for 2026 at or below 2.5% (unchanged or lower than December 2025 baseline). If EITHER condition is not met, this counter-prediction is false.

Brier breakdown

Calibration − resolution + uncertainty = Brier score. Lower calibration is better; higher resolution is better.

Post-mortem

Auto-resolved (falsified, confidence=0.95). Evidence: The March 18, 2026 FOMC SEP showed: (1) median federal funds rate projection for end-2026 at 3.4%, which IS below 3.75% — satisfying condition 1. However, (2) the median 2026 PCE inflation projection was revised UPWARD to 2.7% from 2.4% in the December 2025 SEP, well above the 2.5% threshold — violating condition 2. The prediction required BOTH conditions to be met simultaneously. Sources: https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20260318.pdf; https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20260318.htm; https://finance.yahoo.com/news/live/fed-meeting-live-updates-federal-reserve-holds-rates-steady-forecasts-1-rate-cut-in-2026-180216872.html. Reasoning: Condition 1 was met: the median end-2026 federal funds rate projection of 3.4% is below the 3.75% threshold. Condition 2 was NOT met: the median 2026 PCE inflation projection was revised upward from 2.4% (December 2025) to 2.7% (March 2026), which both exceeds the 2.5% ceiling and represents an upward revision rather than a downward revision or flat hold. Since the falsification criteria states 'If EITHER condition is not met, this counter-prediction is false,' the failure of condition 2 alone is sufficient to falsify the prediction.