Jerome Powell warns of highly uncertain outlook and Iran-driven price rises
Updated
Updated · The Motley Fool · May 3
Jerome Powell warns of highly uncertain outlook and Iran-driven price rises
13 articles · Updated · The Motley Fool · May 3
At his final press conference as Fed chair, Powell said oil above $100 a barrel helped lift March CPI by 0.9 points to 3.3%, with Cleveland Fed estimates near 3.6% for April.
The Fed has kept rates unchanged for three meetings, undermining earlier market bets for at least two 2026 cuts and raising the risk that borrowing costs stay higher for longer.
That could pressure the S&P 500, now back at record highs and trading above its five-year valuation average, especially if Middle East tensions persist, inflation broadens and investors shift to safer assets.
With rate cuts now unlikely, is the stock market's record-breaking rally built on a foundation of sand?
Amidst political attacks and deep internal division, can the Federal Reserve still effectively steer the U.S. economy?
A Middle East conflict is choking global oil supply. Could this single event trigger the next worldwide economic recession?
In April 2026, the Federal Reserve held interest rates steady amid rising inflation and uncertainty caused by the Iran conflict disrupting oil flows through the Strait of Hormuz. This conflict triggered a sharp surge in oil prices, pushing up energy costs that fueled inflation and slowed U.S. economic growth. Higher energy prices forced consumers to cut discretionary spending and businesses to raise prices, creating a risk of stagflation—persistent inflation combined with slow growth. The Fed faces internal divisions on policy direction, with no rate cuts expected in 2026 and possible hikes in 2027. Leadership transition adds complexity, but Powell’s continued presence ensures some stability during this challenging period.