The Fed Is Flying Blind

The Federal Reserve kept its benchmark interest rate unchanged at 3.5–3.75% on Wednesday, March 18, 2026, as Chair Jerome Powell acknowledged that the escalating Iran war has created an environment of extreme uncertainty.

During his press conference, Powell used some form of the word "uncertain" more than half a dozen times. When asked about the impact of the Middle East conflict on the economy, his answer was blunt: "It's too soon to know."

The Markets Are Not Reassured

The reaction was brutal. Stocks fell to session lows as Powell's comments sank in. The S&P 500 briefly dipped below its 200-day moving average for the first time since May. The bond market signaled rising inflation fears, with traders now pricing in at most one rate cut for all of 2026 — down from expectations of two or three just weeks ago.

  • Oil at $118/barrel — Brent crude surged to its highest level since 2022 following tit-for-tat strikes on Gulf energy infrastructure.
  • One dissent — Governor Stephen Miran wanted a quarter-point cut, worried about the labor market.
  • GDP projection raised to 2.4% growth, but inflation expectations also rose.

Powell's Job Is On the Line

In a striking moment, Powell addressed his own future directly, saying he has "no intention of leaving the board" until the ongoing investigation is resolved. His term doesn't expire until early 2028, but political pressure is mounting from all sides.