Fed Holds Rates Steady Amid Higher-Than-Expected Inflation And The Iran War

The Federal Reserve issued an updated Summary of Economic Projections weeks after U.S. strikes on Iran and subsequent shocks to global oil supplies. The timing increases upside risk to near-term inflation and energy prices and could complicate the Fed's interest-rate outlook and policy path. Expect elevated volatility in rates, commodities and FX as markets reprice inflation and policy expectations.

Analysis

The Federal Reserve issued an updated Summary of Economic Projections weeks after U.S. strikes on Iran and subsequent shocks to global oil supplies. The timing increases upside risk to near-term inflation and energy prices and could complicate the Fed's interest-rate outlook and policy path. Expect elevated volatility in rates, commodities and FX as markets reprice inflation and policy expectations.