Oil Price Shocks May Push Interest Rate Cuts Into 2027

Interest rate cuts may need to wait until 2027. This delay is the result of an extended bout of high oil prices caused by the Iran war, which delays inflation's progress toward the Federal Reserve's 2% goal. Federal Reserve policymakers in March kept short-term interest rates steady in their current 3.50%-3.75% range. A majority of policymakers projected at least one rate cut this year. Chicago Fed President Austan Goolsbee said that if inflation stays up, the timeline for rate cuts is pushed out of 2026. He also noted that there are circumstances where rates could go up.