The Fed is keeping interest rates steady due to uncertainty surrounding the war in Iran.

WashingtonThe first Federal Reserve (Fed) meeting since the start of the Iran-Contra affair concluded with interest rates frozen at around 3.5% to 3.75%. The closure of the Strait of Hormuz and the rise in oil prices have given the head of the US central bank, Jerome Powell, further reason to keep rates at the same level. Powell, whose term is about to expire, seems determined to resist pressure from Donald Trump to lower rates. He is also mindful that just last weekA judge dismissed the Republican's criminal investigation against PowellThis underscores the harassment campaign he is suffering at the hands of the US government.

"Uncertainty about the economic outlook remains high. The implications of developments in the Middle East for the US economy are uncertain. The Committee is mindful of the risks on both sides of its dual mandate," the Board of Governors emphasized in its decision. During the press conference following the decision, Powell stressed that it is still too early to gauge the impact of rising oil prices: "What I want to emphasize is that at this point, nobody knows."

In this context, the central bank chairman acknowledged that if the war and the price of oil continue to rise, he does not rule out an interest rate hike at the next meeting. "The possibility that our next move will be to raise rates was discussed at the meeting," he explained. The Fed chairman, while not wanting to speculate about what might happen, stated: "We are prepared to do what is necessary." However, he seemed quite optimistic about the outlook: "The U.S. economy has been performing quite well despite numerous significant challenges over the past few years; it's been incredible to see." Another point Powell highlighted was the growth in U.S. productivity, although he couldn't pinpoint the exact driver: "Economic analysts are very skeptical of periods of high productivity because they are very rare and are often revised downward." The Fed chairman's comment comes at a time when economists fear a tech bubble is forming in the AI ​​sector. This is the second consecutive time the central bank has opted to keep interest rates in the same range, after starting 2026 with rising inflation and declining hiring. After the cuts at the end of 2025, Powell again put the brakes on, citing macroeconomic data that appeared to be stabilizing but still called for caution. The latest data published by the Department of Labor in February sent another warning: a total of 92,000 jobs were lost, a net negative figure and worse than the 50,000 job creation forecast by analysts. Meanwhile, the unemployment rate rose by one-tenth of a percentage point to 4.4%.

The Fed meeting also coincided with one of the worst days for oil prices on the global market since the United States and Israel attacked Iran. On Wednesday, oil and natural gas prices soared after Tehran reported that the bombings had affected the South Pars petrochemical facilities in southern Asaluyeh. The news has worried investors, who now fear the regime will retaliate with an attack on other oil and gas facilities in the Gulf, which has driven the price of crude oil up to $110 a barrel.

The specter of Trump's pressure

Although Powell and a large number of governors continue to resist in order to maintain the Federal Reserve's independence, Trump's pressure has begun to be reflected in the votes. The culture of near-unanimous consensus in decision-making has begun to crumble since the new governors appointed by the Republican took office. Over the past year, his three appointees have distanced themselves from the majority, including two at the last Fed meeting. This week, it was expected that all three would again favor cutting rates. However, the pressure from the military campaign in the Middle East made itself felt, and the only dissenting vote was that of Stephen Miran, who wanted a quarter-point cut.

During previous appearances, Powell had declined to comment on the president's pressure and the scenario after the end of his term this May. For the first time, the economist has confirmed that if his successor has not been confirmed by the end of his term, he will remain at the helm of the bank until that happens. He also stated that he has no intention of leaving his post despite the criminal investigation opened against him by the Justice Department. Although a federal judge dismissed the charges last week, the Trump administration has already announced it will appeal the case to a higher court to pursue the charges against Powell.