Particle.news
Download on the App Store
11 ARTICLES
·
3h ago

Iran War Oil Shock Puts Fed and BoE on Hold as Markets Reprice 2026 Cuts

An energy surge linked to supply disruptions has shifted central-bank focus toward inflation risk over previously expected easing.

Image
Image
U.S. Federal Reserve Chair Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) on interest rate policy, in Washington, D.C., U.S., January 28, 2026. REUTERS/Jonathan Ernst

Overview

  • Forecasters expect the Federal Reserve to leave rates at 3.5%–3.75% this week, with the outlook to be clarified by new projections and a closely watched Powell briefing.
  • The conflict has disrupted flows through the Strait of Hormuz, a route that typically carries about one-fifth of global oil, driving volatile price spikes and inflation concerns.
  • Recent U.S. data point to weakening growth, including a February payroll loss of 92,000, unemployment at 4.4%, and a downward revision of Q4 2025 GDP to 0.7%.
  • Market pricing now reflects far fewer Fed cuts in 2026, with roughly 20 basis points of easing implied, as bond yields and swap rates rise.
  • The Bank of England is expected to keep Bank Rate at 3.75% this week, with economists citing the energy shock and Moneyfacts reporting about 530 UK mortgage deals withdrawn since Monday.