As Iran war heightens affordability issues, don't expect the Fed to 'ride in and save the day,' analyst says

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Amid a war in Iran, inflation pressures, a weakening job market and an uncertain outlook for tariff policy, Federal Reserve officials will meet next week and announce a decision on interest rates.

The federal funds rate, set by the Federal Open Market Committee, is the rate at which banks lend to one another overnight, but it also has a trickle-down effect on many consumer borrowing and savings rates.

For now, experts think the central bank will stay on hold. Futures market pricing is implying almost no chance of a rate cut, according to the CME Group’s FedWatch gauge.

“Fed officials will sit on their hands until they get some clarity around how the war with Iran is playing out and which of its mandates, low and stable inflation or full-employment, is most in jeopardy,” said Mark Zandi, chief economist at Moody’s. “That could take weeks, if not two to three months.”