"Inflation Is High"—Fed Changes Its Language as Iran War Fuels Caution on Rate Cuts

[Financial News, New York = Reporter Lee Byung-chul] The Federal Reserve System (Fed) held its base rate steady at 3.50% to 3.75% and formally warned of rising energy prices and economic uncertainty stemming from the 2026 Iran War. The prolonged conflict is being seen as a sign that inflationary pressures are building again, which could also affect the future path of monetary policy.
In a statement released on the 29th local time, the Federal Open Market Committee (FOMC) said recent global energy price increases had intensified upward pressure on prices. It also described developments in the Middle East as a factor that was creating "a high degree of uncertainty about the economic outlook."
What stands out is the change in how the Fed described inflation. In this statement, the Fed said inflation was "elevated." That is a stronger expression than the previous statement's "somewhat elevated," suggesting a higher level of concern about prices.
Markets are interpreting this as a sign that the Fed's vigilance on inflation has increased. As the fallout from the 2026 Iran War pushes global oil prices higher again and adds to supply-chain uncertainty, analysts say the timing of any rate cut is likely to be pushed back further than expected.
Art Hogan, chief market strategist at B. Riley Wealth, told CNBC in an interview that "this Federal Open Market Committee meeting focused on the risks the Iran War poses to the Fed's two mandates: price stability and employment."
He added, "I get the impression that the Federal Open Market Committee will need at least a few more meetings before it adjusts rates," and said, "No matter who becomes the next Chair of the Federal Reserve, there is a strong chance there will be no rate changes for now."



[email protected] Reporter Lee Byung-chul Reporter