The attacks in the Middle East could make it harder for the Fed to cut rates

President Donald Trump has repeatedly demanded the Federal Reserve slash interest rates. But Fed officials have stood pat, waiting to see how his administration’s sweeping policy changes affect the economy first.

President Donald Trump has repeatedly demanded the Federal Reserve slash interest rates. But Fed officials have stood pat, waiting to see how his administration’s sweeping policy changes affect the economy first. Now there’s another factor that could delay a rate cut: the conflict between Israel and Iran. On Friday, Israel struck at Iran’s nuclear and military sites in an unprecedented attack that sent global oil prices surging. Investors and analysts fretted that a spiraling conflict could send inflation rising across the world, including in the United States. And that could give the Fed further pause at a two-day policy meeting next week. “If this situation were to deepen further and oil prices were to stay durably higher, it would just add to the challenges that the Fed is already facing with the potential for tariffs to push up inflation,” Robert Sockin, senior global economist at Citigroup, told CNN. “Fed officials have emphasized that they’re not in a rush to cut rates because they don’t know how the tariffs will exactly play through into the economy, but if you have even more upside risks to inflation, you’re probably looking at an end-of-year rate cut only,” he added. Trump’s policy shifts on everything from trade to immigration could all raise unemployment and jack up prices. And his frenetic back-and-forth on tariffs has made it complicated for forecasters to estimate with any confidence what the economy could look like in the future.