Fed Weighs War Risks to Economy as Inflation Surges

Minutes from March meeting may provide insight into policymakers' concerns over U.S.-Iran conflict's impact

Apr. 8, 2026 at 10:05am

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The U.S. Federal Reserve will release the minutes from its March meeting on Wednesday, which could shed light on how policymakers are assessing the economic risks posed by the ongoing U.S.-Iran war. The conflict has already sent oil prices soaring, adding to inflationary pressures, and the minutes may detail various scenarios the Fed is considering as it tries to navigate the unpredictable situation.

Why it matters

The Fed's ability to achieve its dual mandate of price stability and maximum employment will be heavily influenced by how the war and resulting energy price shocks play out. The minutes could indicate whether officials are leaning more toward prioritizing inflation or growth as they determine the appropriate monetary policy response.

The details

At their March 17-18 meeting, Fed policymakers raised their 2026 inflation outlook by about 0.25 percentage points, with the overall PCE price index expected to end the year at 2.7%. However, new research suggests that estimate may be too low, as oil prices could spike to $132 or even $167 per barrel depending on how long the Strait of Hormuz remains blockaded, adding up to 1.47 percentage points to U.S. headline inflation.

  • The Fed meeting took place on March 17-18, 2026.
  • The minutes from that meeting will be released on Wednesday, April 8, 2026 at 2 p.m. EDT.

The players

Federal Reserve

The central banking system of the United States, responsible for monetary policy and maintaining economic stability.

Donald Trump

The President of the United States, who has cast the U.S.-Iran conflict in "civilizational terms."

Jerome Powell

The Chair of the Federal Reserve, who said various economic scenarios were discussed at the March meeting.

Austan Goolsbee

The President of the Federal Reserve Bank of Chicago, who expressed concerns about the "troubling" inflationary pressures.

Dallas Fed

The Federal Reserve Bank of Dallas, whose new research suggests the Fed's inflation outlook may be too low.

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What they’re saying

“We did talk about alternative scenarios a little bit. It's very uncertain...We shouldn't assume it's going to be one thing or another”

— Jerome Powell, Chair, Federal Reserve

“I was optimistic that we would get back to this path to 2% inflation, but yikes, it's going from orange to red lately. We had tariffs increasing prices, that was supposed to go away, kind of didn't go away, and now we add another stagflationary shock on top ....it's a troubling moment.”

— Austan Goolsbee, President, Federal Reserve Bank of Chicago

What’s next

The Fed will be closely monitoring the ongoing U.S.-Iran conflict and its impact on energy prices and inflation as it determines the appropriate monetary policy path forward. The minutes from the March meeting may provide insight into how policymakers are weighing these risks.

The takeaway

The Fed faces a delicate balancing act as it tries to rein in stubbornly high inflation without undermining economic growth. The fallout from the U.S.-Iran war has added significant uncertainty, and the central bank will need to carefully assess a range of potential scenarios as it charts the best course of action.