Fed officials are grappling with a host of economic challenges, from stubborn inflation to a slowing job market.

The U.S. central bank is widely expected to hold interest rates steady as officials assess the economic fallout from the war with Iran.

The Fed kept rates on hold for a second consecutive meeting — with the federal funds rate in a range between 3.5% and 3.75% — after three cuts late last year.

What Has Donald Trump Said About Interest Rates? President Donald Trump has pressured the Fed and Fed Chair Jerome Powell to cut interest rates more quickly, writing on Truth Soci

Federal Reserve officials expect the Iran war will worsen inflation this year while having little impact on growth, but they still expect to cut their key rate once in 2026. For now, Fed policymakers left short-term interest rates unchanged Wednesday for the second straight meeting at about 3.

Financial markets are now pricing in a greater probability that the Fed's next move will be a rate hike rather than a cut. The Iran war has driven up energy prices, putting pressure on the Fed to stamp down inflation with higher interest rates.

The US Federal Reserve raised its outlook for inflation as it held interest rates steady on Wednesday, citing an "uncertain" economic outlook due to the war in Iran.

The Federal Reserve held interest rates steady on Wednesday amid the war with Iran. Oil price spike likely to keep rates on hold but deepen divisions among Fed officials this week