{"id":549380,"date":"2026-03-18T23:55:09","date_gmt":"2026-03-18T23:55:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/549380\/"},"modified":"2026-03-18T23:55:09","modified_gmt":"2026-03-18T23:55:09","slug":"fed-holds-interest-rates-steady-as-iran-war-drives-up-oil-prices-and-inflation-fears-us-interest-rates","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/549380\/","title":{"rendered":"Fed holds interest rates steady as Iran war drives up oil prices and inflation fears | US interest rates"},"content":{"rendered":"

The US Federal Reserve<\/a> held interest rates steady for the second time this year, a widely expected move amid turmoil in the Middle East and rising energy prices.<\/p>\n

Fed officials faced a confluence of issues to consider in their meeting this week: soaring oil and gas prices<\/a>, fluctuating inflation that still remains above the Fed\u2019s target of 2%<\/a>, and a weakened job market that unexpectedly saw<\/a> 92,000 losses last month.<\/p>\n

All but one of the 12 voting members of the committee voted to keep rates at a range of 3.5% to 3.75%, resisting enormous pressure from Donald Trump<\/a> to lower borrowing costs at the risk of driving up prices in the long term. Fed governor Stephen Miran, who was appointed by Donald Trump last fall, was the sole dissenter.<\/p>\n

In a statement, the board noted that \u201cuncertainty about the economic outlook remains elevated\u201d and \u201cimplications of developments in the Middle East for the US economy<\/a> are uncertain\u201d. In new projections, Fed officials indicated they still expect one quarter-point rate cut this year \u2013 unchanged from the consensus in January.<\/p>\n

After the Fed\u2019s announcement highlighted uncertainty around oil prices, US stocks tumbled sharply Wednesday afternoon. The Dow fell over 1.6%, while the S&P 500 and Nasdaq both dropped over 1.3%.<\/p>\n

The Fed\u2019s decision comes as the US and Israel approach their third week of war with Iran, forcing central banks across the world <\/a>to decide how to weigh skyrocketing gas prices and their impact<\/a> on the global supply chain.<\/p>\n

\u201cIn many ways, an energy shock is a central banker\u2019s nightmare as it creates tension between a shaky labor market and rising inflation,\u201d Joe Brusuelas, chief economist at RSM, said on Tuesday, ahead of the Fed\u2019s decision. \u201cWhile [the Fed] can take action to address a financial crisis by printing money and injecting liquidity into the financial system, it cannot print oil.\u201d<\/p>\n

The Bank of England<\/a>\u2019s monetary policy committee is also expected to hold interest rates on Thursday amid the global economic uncertainty.<\/p>\n

In a press conference after the central bank\u2019s announcement, Fed chair Jerome Powell<\/a> acknowledged that higher energy prices will push up inflation in the near-term, but said \u201cit is too soon to know its scope and duration of the potential effects on the economy\u201d.<\/p>\n

\u201cThe US economy is doing pretty well,\u201d he said. \u201cIt\u2019s just we don\u2019t know what the effects of this will be and really, no one does.\u201d<\/p>\n

Powell also acknowledged that while consumer spending in the US has remained resilient and real wages have been increasing for nearly three years, many Americans are still feeling squeezed.<\/p>\n

\u201cIt will take some years of positive, real earning gains for people to feel good again,\u201d he said. \u201cIt makes us even more committed, if that\u2019s possible, to getting inflation back to 2% on a sustained basis.\u201d<\/p>\n

Trump said recently that rising oil prices are a \u201cvery small price to pay\u201d to achieve his goals in Iran and are a boon to American oil producers who stand to make \u201ca lot of money\u201d from increased demand.<\/p>\n

It\u2019s the same defiant stance he\u2019s taken on the impact his tariffs have had on the global economy. US inflation swung from 2.3% last April up to 3% in September, before going back down to 2.4% at the start of this year. Economists have also noted the labor market has essentially flatlined<\/a> since Trump\u2019s tariffs were first announced, with just 181,000 jobs added to the economy in all of 2025 \u2013 the lowest amount since the Covid-19 pandemic.<\/p>\n

Powell has said Trump\u2019s trade and immigration policies have caused instability in the US economy, putting himself at odds with the president who has spent the last year demanding lower interest rates.<\/p>\n

The Fed chair has faced particular vitriol from Trump, who asked on social media Wednesday morning: \u201cWhen is \u2018Too Late\u2019 Powell lowering INTEREST RATES?\u201d<\/p>\n

A federal judge last week halted<\/a> a criminal investigation spurred by the Department of Justice against Powell over renovations at the Fed\u2019s headquarters. Powell called the investigation a \u201cpretext\u201d for pressuring the Fed to lower rates, and the judge agreed that there is a \u201cmountain of evidence\u201d that suggested the move was intended to put pressure on Powell.<\/p>\n

Though the Trump administration has vowed to appeal this decision, doing so would delay the confirmation of Kevin Warsh, the White House\u2019s pick<\/a> for the next Fed chair who is widely expected to help carry out<\/a> the president\u2019s wishes of lower interest rates.<\/p>\n

On Wednesday, Powell noted that if the next Fed chair isn\u2019t confirmed by the end of his term on 15 May, he will continue to serve as chair until his successor is confirmed, adding that he has \u201cno intention of leaving the board until the investigation is well and truly over with transparency and finality\u201d.<\/p>\n

In another potential check to Trump\u2019s interference with the central bank, the supreme court is also poised to rule before June on his firing of Lisa Cook, a Fed governor. The court\u2019s justices appeared resoundingly skeptical<\/a> of the Trump administration\u2019s oral arguments in January, with Trump-nominated justice Brett Kavanaugh questioning the potential negative effects on the economy if the White House succeeds in exerting control over the Fed board.<\/p>\n

This was the penultimate Fed meeting for Powell, whose term is set to end in May after eight years as chair of the central bank. It is unclear whether Powell will break from precedent and choose to stay on the Fed board until his term as a Fed governor ends in January 2028.<\/p>\n

\u201cOn the question of whether I will continue to serve as a governor after my term ends and after the investigation is over, I have not made a decision yet,\u201d Powell said Wednesday. \u201cI will make that decision based on what I think is best for the institution and for the people we serve.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The US Federal Reserve held interest rates steady for the second time this year, a widely expected move…\n","protected":false},"author":2,"featured_media":549381,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-549380","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/549380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=549380"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/549380\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/549381"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=549380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=549380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=549380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}