When it comes to the benchmark federal funds rate, we’re all in.
That’s because it controls interest rates automatic again student loans, mortgage loan again credit cards.
It also affects the 10-year Treasury bond, which also has an effect housing prices in a stagnant housing market.
Billions of dollars in between taxpayers’ money – mostly from individual tax revenues and payroll taxes – pay the interest on the $38.9 trillion national debt.
For consumers, a reduction in the delay rate can mean high borrowing costs during the affordability crisis, sending many Americans scrambling to pay energy, grocery, housing, and health care bills in a “low-wage, low-cost” labor market.
Against the backdrop of the Iran attack, rising inflation expectations, labor market concerns, and inflation fears, the Federal Reserve is widely expected to keep interest rates on hold at its policy-making meeting this week.
That suspension is not surprising, although some die-hard Fed watchers including President Donald Trump want to see a sharper easing of monetary policy and lower interest rates.
The state of future rate cuts in 2026 the future concerns Main Street, Wall Street and Washington, DC
The Federal Open Market Committee will report the most anticipated Summary of Economic Projections(September) on March 18, provides a blueprint for how officials interpret the effects of the Iran War on inflation in the short, medium, and long term.
Economists and market analysts have adjusted their forecasts over the past three weeks, and some are now skeptical that the Fed will reduce rates altogether by 2026.
The Fed’s dual congressional mandate requires it to balance full time job again price stability.
These two goals often conflict, operate at different times, and are influenced by unexpected world events such as pestilence and war.
The FOMC voted 10-2 to hold interest rates stable to 3.50% to 3.75% in January after three consecutive percentage point cuts in its last three meetings to 2025.
That cut was based on data showing weaker growth in the labor market and cooling inflation, though still sticky and with a tariff.
Additional Federal Reserve:
It was the first FOMC break since July 2025.
The Fed uses government and private data sources to drive monetary policy decisions, a rear-view mirror approach that is often criticized as too restrictive.
Those critics, including Treasury Secretary Scott Bessent and former Fed Governor Kevin Warsh, Trump’s nominee to The next Fed chair, promote the use of more advanced models including The AI setting interest rates.
The SEP is a quarterly report from all 19 Fed officials, including the 12 voting members of the FOMC.
It measures important economic variables including:
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Real Growth of Real Home Product. The recently revised GDP has come in 0.7% in Q4 2025, a sharp decline from 4.4% growth in Q3 2025.
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Unemployment Rate. This was recently reported more than expected 4.4%following a disappointing February earnings report.
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Inflation. It includes both projections of Personal Consumption Expenditures (PCE) and core PCE inflation excluding food and energy. January PCE entered in 2.9% year over year, above the Fed’s annual target of 2%.
“Basically it shows that inflation has tightened to start the year,” Omair Sharif, founder of the research firm Inflation Insights, told the New York Times on March 13. “All the key measures are going in the wrong direction.”
Even before the attack on Iran, the Fed faced a problem arising from risks that concern both sides of its federal mandate: jobs and inflation.
Ahead of the release of the latest inflation and GDP figures for January and February, Fed officials expressed a split view of cutting interest rates in 2026.
Related: Traders renew Fed-cut-rate bets as jobs dip, oil rises
President Trump continued to criticize the Fed and Powell for not lowering rates to 1% or less.
“Where is Federal Reserve Chairman, Jerome ‘Too Late’ Powell, today?” posted March 12 on TruthSocial. “He should lower the Interest Rate, ASAP, not wait for the next meeting!”
Traders fear that instability in Iran will increase inflation and drag down the labor market, threatening both sides of the Fed’s mandate.
The CME Group’s FedWatch tool moved the likelihood of a quarterly cut to December from June, where it stood a month ago.
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Goldman Sachs has scaled back its forecast for a central bank rate cut, and now expects a quarter-point cut in September and December, citing rising inflation risks related to the Iran war. Goldman previously indicated that a cycle of easing would begin in June, followed by further tapering in September.
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Barclays it also pushed back its initial cut forecast to September, expecting a one-quarter point reduction for the year, down from estimates of multiple cuts.
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Morgan Stanley U.S. Chief Economist Michael Gapen said that while the Fed may be “looking at” a short-term energy rate shock, risks now lean towards cuts that come later – and larger – if economic activity weakens.
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High Frequency Economics Chief economist Carl Weinberg offered a more extreme approach, which he says the Fed should consider rate hike at its meeting on March 17-18 to postpone the increase in oil consumption which is – in his opinion – 3.5% in the summer.
The pain of the oil shock from the Iran war is not just at the gas pump for consumers.
(Though I was more than happy to fill up my nearly empty tank last week for $3.09 a gallon after seeing many gas stations in my hometown of Boston advertising $3.69 for regular gas today.)
A global oil disruption to the supply chain could last for months, driving prices higher. The result will appear in the following.
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The Consumer Price Index data topic quickly
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Primary inflation is indirect through use cargo, aircraftagain goods
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PCE datawhich is the Fed’s preferred measure of price stability
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If a continuous stock market beatinglower spending by high-income households, which has fueled the K-shaped economy in recent years
“The conflict in the Middle East is likely to leave a visible mark on the US economy through higher energy prices, tight financial conditions, heightened uncertainty in the private sector and renewed pressure on the supply chain,” EY-Parthenon economists Gregory Daco and Lydia Boussour wrote a note reported by Bloomberg March 13.
Related: A surprise court ruling resets bets on Warsh as the next Fed chairman
This story was originally published by TheStreet on March 15, 2026, where it appeared first in the Fed section. Add TheStreet as a favorite source by clicking here.
