Iran war raises affordability concerns as the Fed may stay on hold

Analysts say the Fed is likely to hold rates when it meets next week amid war-related inflation pressures, and market pricing shows little chance of a near-term rate cut.

Federal Reserve officials will meet next week to announce a decision on interest rates amid a war in Iran, inflation pressures and a weakening job market. The federal funds rate is set by the Federal Open Market Committee and influences many consumer borrowing and savings rates. Experts quoted in the article say the central bank is likely to stay on hold for now. The piece also reports that markets may be underestimating medium- and long-term inflation risks. Current status: - Fed officials are scheduled to meet next week to set the federal funds rate. - Futures market pricing implies almost no chance of a near-term rate cut, according to the CME Group FedWatch gauge. - Analysts quoted said officials plan to wait for clarity on how the Iran war affects inflation and employment, and that could take weeks. Summary: Officials have indicated they will await clearer signals about how the conflict in Iran affects inflation versus employment before changing policy. Markets currently price little chance of a near-term rate cut. The Federal Reserve is scheduled to announce its rate decision next week.