Fed Holds Interest Rates Steady After Iran Conflict Spikes Oil Prices

Central bank's decision marks first move since U.S.-Israeli war with Iran drove up gasoline prices and risked wider inflation.

Mar. 18, 2026 at 10:24pm

Got story updates? Submit your updates here. ›

The Federal Reserve held interest rates steady on Wednesday at its first meeting since the U.S.-Israeli war with Iran drove up gasoline prices and risked a wider bout of inflation. The central bank's move marked the second consecutive time it has opted to maintain interest rates at current levels since the outset of 2026. Elevated price increases have coincided with a slowdown of economic growth, threatening to intensify an economic double-whammy known as 'stagflation,' which poses difficulty for the Fed.

Why it matters

The Fed's decision on interest rates has significant implications for the U.S. economy, as it must balance the need to curb inflation while also supporting economic growth. The war with Iran and resulting spike in oil prices have added further complexity to the Fed's policy decisions, as they risk fueling broader inflation while also potentially slowing economic activity.

The details

The benchmark interest rate 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 outset of the COVID-19 pandemic. A lackluster jobs report showed the U.S. economy lost 92,000 jobs in February, marking a reversal of fortunes for the labor market. Additionally, a revised government report on GDP showed the economy grew at a sluggish annualized pace of 0.7% over the final three months of 2025.

  • The Federal Reserve held its latest meeting on Wednesday, March 18, 2026.
  • The Fed had previously cut interest rates a quarter-point three straight times before opting to hold rates steady in its last two meetings.

The players

Federal Reserve

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

Jerome Powell

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

Jeanine Pirro

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

James Boasberg

The U.S. District Judge who ruled that the government 'produced essentially zero evidence' to support a criminal investigation of Fed Chair Jerome Powell.

Got photos? Submit your photos here. ›

What’s next

The judge's ruling blocking DOJ subpoenas to the Federal Reserve's Board of Governors is expected to be appealed by the government.

The takeaway

The Federal Reserve's decision to hold interest rates steady highlights the delicate balance it must strike between controlling inflation and supporting economic growth, particularly in the wake of geopolitical events like the U.S.-Israeli war with Iran that have disrupted energy markets and threatened to exacerbate stagflation.