Trump wants the Fed to cut rates, but his Iran war is getting in the way

President Donald Trump was already impatient for a rate cut from the Federal Reserve. If there was ever a time when he wanted even more, it would be Wednesday — but his war with Iran may have blown things out of proportion, sending oil prices soaring and reigniting inflationary fears that make cuts harder to justify.

Few things determine more than what Americans can afford Federal Reserveeven though most people rarely pay attention to it. The central bank doesn’t set the price of food or cars, but it does help determine the cost of borrowing money – and right now, high rates are keeping mortgage payments, car loans and credit card bills painfully high.

When the Fed’s two-day meeting ends on Wednesday, policymakers are expected to leave rates unchanged.

Now, the war in Iran complicates not only this week’s decision, but also the path forward if the conflict drags on and keeps oil prices high.

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US Federal Reserve Chairman Jerome Powell is expected to announce that the central bank will keep rates steady this week. (Roberto Schmidt/AFP/Getty Images)

Tit-for-tat strikes in Iran and across the Middle East have helped push crude above $100 a barrel for the first time since 2022, rattling global markets and reigniting concerns about tightening energy supplies.

This pressure is starting to affect consumers. As oil rises, price of gasoline and diesel are growing rapidly – ​​particularly diesel, which often moves faster due to its close ties to freight and industrial demand.

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As of March 17, AAA estimated the national average for regular gasoline at $3.79 per gallon, up 88 cents from the previous month, while diesel climbed to $5.04, up $1.39 over the same period.

Jet fuel is also becoming more expensive.

For airlines, fuel represents one of the largest operating costs, so sustained increases could squeeze margins, drive up ticket prices and add new strain to a travel season already complicated by the DHS shutdown.

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The pressure is also being felt in the housing sector.

Mortgage rates have risen since the start of the war in Iran. The benchmark 30-year fixed rate fell below 6% in late February, its lowest level since September 2022, before rising to 6.26% on March 16, according to data compiled by the Mortgage Bankers Association.

At the same time, the Fed is grappling with a labor market that is beginning to crack. Employers shed 92,000 jobs in February, defying expectations for job growth and clouding the outlook for policymakers.

This combination of stubborn inflation and a weakening job market has only intensified pressure from Trump, whose promise to lower costs for Americans was a centerpiece of his campaign.

For months, he has been pressuring Federal Reserve Chairman Jerome Powell to lower interest rates, arguing that cheaper borrowing would boost growth and provide relief to American households. Fed officials, however, said they wanted clearer evidence that inflation was slowing before cutting it.

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President Donald Trump has nominated Kevin Warsh to succeed Powell at the Federal Reserve. (Saul Loeb/AFP/Getty Images)

On Thursday, Trump pressed Powell to reduce interest rate “immediately”, as the fallout from the conflict involving Iran fuels a surge in energy prices.

“Where is Federal Reserve Chairman Jerome “Too Late” Powell today? He should cut interest rates, IMMEDIATELY, without waiting for the next meeting,” Trump wrote in a Truth Social article, using a mocking nickname for Powell.

For Trump, the timing is brutal.

He campaigned on lower costs for Americans, but the conflict involving Iran threatens to have the opposite effect: driving up energy prices, making it harder for the Fed to do its job and putting new pressure on one of its top leaders. economic promises.