Iran war’s effect on interest remains a looming unknown

Published March 20, 2026 5:56am ET



For a second meeting in a row, the Federal Reserve has decided to keep the benchmark interest rate constant, which directly influences short-term interest rates throughout the economy.

The Fed decided March 18 to leave the federal funds rate as is, with no imminent sign of another cut to come. But if anything, Fed Chairman Jerome Powell sounded more worried about the upside risk of inflation in the aftermath of Operation Epic Fury. The central bank’s leader, who said that “higher energy prices will push up overall inflation” as a result of the war in Iran, said a rate hike is not “off the table.”

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