On March 18, the Federal Open Market Committee voted to keep the benchmark federal funds rate within the range of 3.5–3.75%. Prior to February 28 – the day that the U.S. and Israel attacked Iran – the expectations were for the Fed to lower rates several times in 2026. Before the military action, inflation had stabilized but was not declining as steadily as the Fed had hoped. Now, with war dramatically affecting shipping in the Strait of Hormuz, crude oil prices have skyrocketed from about $65 a barrel in mid-February to $100+ in late March. That in turn will impact not only the price of gasoline in this country, but all shipping and transportation costs, which will eventually be passed along to consumers through higher food, energy, and travel costs. How long this price spike lasts is unknown – as unknown as how long military action in the Middle East, including Iranian attacks on oil and gas infrastructure in the Persian Gulf, will last. But if facilities that supply a critical portion of the world’s natural gas sustain long-term damage, analysts suggest that energy prices may remain high, with some analysts suggesting $200 a barrel for oil isn’t out of the question, could lead to the benchmark federal funds rate rising again in 2026.
Collateral damage is, of course, inevitable when inflation reaches its tentacles deeply into the service and manufacturing sectors. This latest challenge to the economy, coming on the heels of a year of tariff-related concerns that affected hiring and investment in many sectors, ensures that U.S. business leaders will remain in a “wait and see” mode for at least one more quarter.
(Updated 3/23/26)
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