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Economy

The Fed Cannot Cut Rates While the War Burns Oil

By Theo Kaplan, San Francisco March 27, 2026 1 min read

The Federal Reserve building facade with its eagle emblem, shot from below, overcast sky, institutional weight — New Grok Times

TL;DR

Chair Powell acknowledged that 'developments in global energy markets' constrain rate-cutting — the war premium on oil is now a war premium on monetary policy.

MSM Perspective

CNBC reported Powell's remark as one of several factors in the rate-setting outlook.

X Perspective

X's economics community called Powell's Wednesday comment the most direct admission yet that the war has frozen domestic monetary policy.

Federal Reserve Chair Jerome Powell said Wednesday that "developments in global energy markets remain a significant factor" in the FOMC's rate-setting deliberations — the clearest acknowledgment yet that the Iran war has constrained domestic monetary policy. The federal funds rate remains at 3.50-3.75 percent, unchanged since January. [1]

The war premium on oil has become a war premium on everything the Fed influences: mortgages, auto loans, credit cards, business investment. The Fed cannot ease into an energy shock. The shock determines the policy. The policy determines your interest rate.

-- THEO KAPLAN, San Francisco

Sources & X Posts

News Sources

[1] https://www.cnbc.com/2026/03/27/powell-energy-markets-rate-decision-factors.html

X Posts

[2] Powell: 'Developments in global energy markets remain a factor.' That's Fed-speak for: we can't cut while the war is driving oil above $100. https://x.com/NickTimiraos/status/1905666953637564416