US-Iran conflict impacts Fed rate cut prospects amid inflation concerns
The “Fed rate cut by June 2026 meeting” market currently prices a 2.5% chance of a rate cut, down from 3% 24 hours ago. The “Fed rate cut by September 2026 meeting” market shows a 33.7% probability, up from 23% a day ago. ## Key Takeaways – Market pricing suggests decreased likelihood of a rate cut by June 2026, in light of rising inflation concerns. – The persistent energy shock due to the US-Iran conflict appears to emphasize inflation risks, impacting rate cut prospects. – Recent developments suggest the Federal Reserve may prioritize controlling inflation over easing monetary policy. ## Article Body The Federal Reserve is facing increasing pressure from the latest global supply shock, as the ongoing US-Iran conflict disrupts energy infrastructure in the Middle East. The hostilities have significantly reduced oil supply, with a loss of approximately 10 million barrels per day, driving Brent crude prices above $110-115 per barrel. This situation mirrors the economic tensions during Russias 2022 invasion of Ukraine but with broader regional involvement. The sustained supply disruptions have heightened inflation concerns, making it unlikely for the Fed to overlook these pressures. Federal Reserve Chair Jerome Powell and the FOMC now face challenging decisions to balance inflation control with