Fed Leaves Rates Unchanged on Inflation Risk from Iran War


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The Federal Reserve said Wednesday (4/29) it has left 
U.S. interest rates unchanged at 3.5-3.7% after two days of discussions on the 
economy convinced the central bank that risks of inflation -- particularly from 
high oil prices sustained by the Iran war -- were greater than any benefit to 
be gained from rate reductions.

   "Developments in the Middle East are contributing to a high level of 
uncertainty about the economic outlook," the Fed's policy-making Federal Open 
Market Committee said in a statement. Citing its commitment to bring inflation 
back to 2% or lower, from current levels of over 3%, the central bank said it 
had to be "attentive to the risks to both sides of its dual mandate".

   The retail price of gasoline in the U.S. averaged $4.123 gallon this week, 
rising just a penny shy of $1 from a year ago, data from the Energy Information 
Administration showed.

   Inflation, measured by the Consumer Price Index, showed a headline reading 
that was up 3.3% year-over-year in March -- well above the Fed's 2% per annum 
tolerance.

   Thus, the central bank said it had decided to leave key U.S. rates unchanged 
for the third time since the start of 2026. The last rate cut was in December 
when it applied a 25 basis point reduction to bring rates to the prior range of 
3.75-4.0%.

   Market moves at 2:15 p.m. ET:

NYMEX WTI for June delivery was up $6.99, or 7%, at $106.92 bbl, rallying on 
reports that the U.S. was mulling fresh strikes on Iran after the failure of 
diplomatic efforts to end the Middle East conflict and reopen the Strait of 
Hormuz to petroleum cargoes.NYMEX Gasoline futures for May were up $0.1778 to 
$3.7382 gallon.The U.S. Dollar Index rose 0.339 points to 98.815.


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