Fed Holds Interest Rates Steady Amid Iran War-Driven Inflation

The Federal Reserve held interest rates steady on July 29, 2026, as the economy struggles to contain resurgent inflation caused by the Iran war.

The decision was made despite oil prices surging and stock prices plummeting in response to a resumption of fighting in the Middle East. Oil prices briefly fell below $90 per barrel after a preliminary peace agreement was reached but surged back above $100 last week and remain above $90 per barrel as of Wednesday.

The war has triggered a historic oil shortage, driving up fuel costs and catapulting inflation to a three-year high. The annual pace of price increases currently registers at 3.5%, with Fed Chair Kevin Warsh vowing to slash inflation to the Fed's desired level of 2%.