The Federal Reserve may signal that, affected by the war in Iran, interest rates may no longer be cut this year.

The two-day policy meeting of the Federal Reserve will end on Wednesday local time, with a key question still unresolved: will the ongoing Iran war push up oil prices and lead to a surge in gasoline prices, prompting central bank decision-makers to lower short-term rates again this year? Or will they have to wait and see the direction of the conflict for a few months? Federal Reserve Chairman Jerome Powell is almost certain to announce on Wednesday local time that the central bank will keep key rates unchanged at around 3.6% for the second consecutive meeting. However, the Fed will also release quarterly economic forecasts, which may revise down expectations of a rate cut this year to zero. This adjustment, seemingly subtle, is actually a significant shift after 18 months of repeated rate cuts. Regardless of the Fed's decision, it is a difficult moment for policymakers to release economic forecasts. The Iran war launched by the Trump administration on February 28 has already led to a surge in gasoline prices, and inflation will be pushed up for at least the next one or two months. The inflation forecast released by the Fed on Wednesday will have to be higher than expectations in December last year when officials projected inflation to fall to 2.6% by the end of this year. Many economists predict that even by the end of 2026, the Fed's inflation forecast may still reach as high as 3%. Such a sharp rise in inflation may not be compatible with further rate cuts. At the same time, if gasoline prices continue to rise significantly and for a long enough period, it could drag down the economy - with consumers spending more on gas stations, funds available for other goods and services will decrease. This could lead to an increase in unemployment later this year.