The Federal Reserve held its key interest rate steady at 3.6% for the second consecutive meeting, signaling confidence in underlying economic resilience despite rising geopolitical risks.
Policymakers acknowledged that the Iran conflict is driving up oil prices and pushing 2026 inflation forecasts to 2.7%, up from prior estimates. Core inflation, excluding food and energy, also holds at 2.7%.
Yet officials maintain that the inflationary impact is temporary. They project inflation will return to the 2% target by 2028, with growth revised slightly upward to 2.4% for the year.
Unemployment is expected to remain unchanged at 4.4% by year-end, and the Fed anticipates only one rate cut in 2026-unchanged since December.
Officials emphasized that while Middle East developments carry uncertainty, they do not alter the fundamental trajectory of U.S. economic stability.