Amid war, US Fed holds rates steady

Oil shock may boost inflation, hit growth

- COLBY SMITH

Jerome Powell, the Federal Reserve chair: 'The thing I really want to emphasise is that nobody knows,' he said on Wednesday regarding the war in Iran's effects on the economy. NYT

The US Federal Reserve held interest rates steady on Wednesday, and officials projected they would still proceed with one quarter-point cut this year, as the war in Iran upended the economic outlook.

The decision marks the second meeting in a row in which the central bank has opted against a policy move, voting to keep rates unchanged at a range of 3.5% to 3.75%. Stephen Miran, who was appointed to the Fed last year by President Donald J Trump, issued his fifth straight dissent and voted for a quarter-point cut.

Officials gathered for their latest meeting as the war with Iran stretched into its third week. Supply disruptions stemming from the conflict have pushed energy prices sharply higher, scrambling the Fed’s economic outlook and injecting yet more uncertainty into the debate around when the central bank may restart rate cuts, if at all.

New projections released alongside the rate decision underscored how divided policymakers remain on this point. The “dot plot,” a chart that aggregates what all 19 officials forecast will happen to borrowing costs over the coming years, showed that most of them still see a path to lower rates this year despite expectations for a trickier path to 2% inflation.