Federal Reserve projects one rate cut this year, sees limited economic impact from Iran war

Federal Reserve officials expect the Iran war will worsen inflation this year while having little impact on growth, but they still expect to cut their key rate once in 2026. For now, Fed policymakers left short-term interest rates unchanged Wednesday for the second straight meeting at about 3.6%. Still, by keeping their forecast for a rate cut this year and next — the same projections that they made in December — central bank policymakers appear to expect the gas price spike from the Iran war to have a largely temporary effect on inflation and the economy.