Oil shocks extend the timeline for Federal Reserve rate cuts
EB
Ellis Beaumont
Fed interest rate decision · Apr 10, 2026
Source: The Digital Ledger Data Terminal
Interest rates may remain in a holding pattern as the Federal Reserve works to bring inflation back to its 2% goal. San Francisco Federal Reserve President Mary Daly says the timeline for reaching that goal has been extended by an oil price shock stemming from the Iran war.
Until recently, many Fed policymakers, including Daly, anticipated that tariff-related inflation would ease later this year, allowing for one or two rate cuts. This expectation was disrupted by the Iran war, which drove oil prices up sharply and lifting gasoline prices above $4 a gallon. The resulting surge in consumer prices in March was the fastest pace in nearly four years.
If the disruption to oil delivery remains, inflation may stay elevated longer than the Fed anticipated. In that case, the Federal Reserve, which has held its short-term interest-rate target in the 3.50%-3.75% range at its two meetings this year, will hold steady until inflation is controlled.