Fed Holds Interest Rates Steady Amid Economic Uncertainty

Central bank's decision comes as war with Iran spikes oil prices and risks wider inflation

Mar. 18, 2026 at 3:47pm

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The Federal Reserve will announce its latest interest rate decision on Wednesday, marking the first such move since the U.S.-Israeli war with Iran drove up gasoline prices and risked a wider bout of inflation. The central bank is expected to hold rates steady, as markets peg the chances of no change at around 99%. The decision comes amid a slowdown in economic growth and a weakening labor market, posing a challenge for the Fed as it tries to balance fighting inflation and supporting the economy.

Why it matters

The Fed's interest rate decision will have significant implications for consumers, businesses, and the broader economy. Raising rates could help curb inflation, but risks slowing economic growth further. Lowering rates could spur growth but may also stoke higher inflation, especially with oil prices spiking due to the conflict with Iran.

The details

The benchmark interest rate currently stands at a level between 3.5% and 3.75%, a significant drop from a recent peak in 2023 but still well above the 0% rate established at the start of the COVID-19 pandemic. A lackluster jobs report last week showed the U.S. economy lost 92,000 jobs in February, reversing recent gains, while GDP growth slowed to an annualized pace of just 0.7% in the final quarter of 2025. The war with Iran has driven up oil prices by more than 50% in the past month, with gas prices at the pump rising 81 cents to an average of $3.79 per gallon.

  • The Federal Reserve will announce its interest rate decision on Wednesday, March 20, 2026.
  • The central bank maintained interest rates at its most recent meeting in January 2026, ending a string of three consecutive quarter-point rate cuts.
  • The U.S.-Israeli war with Iran began in recent weeks, driving up oil and gas prices.

The players

Federal Reserve

The central banking system of the United States, responsible for monetary policy and regulating the country's financial system.

Jerome Powell

The current Chair of the Federal Reserve, appointed in 2018.

Jeanine Pirro

The Acting U.S. Attorney who criticized a federal judge's ruling blocking DOJ subpoenas to the Federal Reserve.

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What they’re saying

“A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning.”

— James Boasberg, U.S. District Judge (Unsealed court opinion)

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

What’s next

The Federal Reserve's interest rate decision on Wednesday will be closely watched by investors and economists as they assess the central bank's strategy for navigating the current economic challenges.

The takeaway

The Fed faces a delicate balancing act as it tries to rein in inflation without further slowing economic growth, complicated by the fallout from the war with Iran. Its decision on interest rates will have far-reaching implications for consumers, businesses, and the overall economy.