Fed to Hold Interest Rates Steady as Iran War Scrambles the Economic Outlook

Federal Reserve officials are widely expected to hold interest rates steady at their meeting this week, as attention shifts to how they may respond if fallout from war in the Middle East pulls their policy goals in opposite directions.

The US-Israeli assault on Iran has injected significant uncertainty into the economic outlook, with a sharp rise in oil prices threatening to put pressure on inflation and dampen economic growth. At the same time, lackluster employment data are forcing policymakers to reconsider their assessment of the labor market’s stability.