Fed Weighs Rate Cut Amid Stagflation Risk

0:00On March 18, the Federal Reserve wraps up its two-day meeting today, facing a big question on whether to cut short-term interest rates this year. The war in Iran, launched February 28 by the Trump administration, has driven oil prices up and gas prices spiking nationwide. Average gas now sits at $3.79 a gallon, up 88 cents from just a month ago. Even before the conflict, the economy showed mixed signals. The situation, excluding food and energy, held steady at 3.1% compared to last year. Jobs took a hit too, with employers cutting 92,000 positions in February after adding 130,000 in January. Unemployment edged up to 4.4%. This creates a tough spot for the Fed. Higher gas prices mean less money for other spending, which could slow growth and push unemployment higher later this year. At the same time, the war will boost inflation for months, forcing officials to raise their forecast from December's projection of 2.6%.

1:02Percent this year, possibly to 3% through late 2026. Policy makers face conflicting pressures, cut rates to fight job losses, or hold steady to tame prices. A judge last Friday tossed out Justice Department's opinions targeting the Fed, though prosecutors plan to appeal. His chairpile nears the end of his term, with a possible extension if Kevin Worsh's confirmation slips past May 15th, markets watch closely for. Any signal on rates amid the stack flation risk?