Federal Reserve expected to hold rates steady, offer updated outlook amid Iran war

The Federal Open Market Committee (FOMC) meeting began at 10:30 a.m. ET as scheduled, a Federal Reserve spokesperson said.

The FOMC, the Federal Reserve’s group responsible for setting monetary policy, is meeting for the second time this year. In January, the FOMC voted to hold interest rates steady following three rate cuts last fall. At the meeting, officials said the job market showed “some signs of stabilization” and suggested they would hold for a while to assess economic data before making further adjustments to the federal funds rate.

The FOMC will release its policy decision at 2 p.m. ET on Wednesday after the meeting concludes. Fed Chair Jerome Powell will then give a press conference at 2:30 p.m. ET on Wednesday, which will be livestreamed.

The press conference is expected to be the second-to-last one Powell gives as Fed chair before he steps down in May.

The war in Iran has put global central banks in an awkward position: Just as inflation pressures were easing, a surge in energy prices has raised inflation risks once again, while policymakers also face the risks of slowing economic growth.

Yahoo Finance’s Jake Conley reports:

Read more here.

The context for the Federal Reserve’s two-day March policy meeting has changed significantly in the past two weeks, as the war in Iran shows little sign of moderating and oil prices remain around $100 per barrel.

Although the central bank is expected to stay the course and keep interest rates unchanged in a range of 3.5% to 3.75%, uncertainty around the duration of the conflict has raised questions about the path of policy for the rest of the year.

As my colleague Jennifer Schonberger notes, the oil shock from the Iran war could deepen divisions within the central bank on the inflation outlook.

She writes that a few weeks ago, the big debate inside the Fed was how far rates are from neutral — a level on the Fed’s benchmark policy rate designed to neither boost nor slow economic growth. Now the picture is changing and will be defined largely by how long the war in Iran lasts and how long high oil prices linger.

Officials will release the quarterly “dot plot” — a graph that charts how many interest rate cuts each Fed member sees for this year and next. But economists say they are giving less weight to the projections, given the uncertainty around the duration and impact of the war.

Read more about what to expect at this March’s Fed meeting here.