The Federal Reserve left U.S. interest rates unchanged at 3.5%–3.75%, as the energy crisis triggered by the war in the Middle East threatens to reignite inflationary pressures.

Analysts and traders largely expected the FOMC to avoid policy changes amid the uncertainty caused by the conflict.

Even before the war, February’s inflation data had already signaled upward price trends.

The conflict has only added further uncertainty, intensifying concerns about the potential for stagflation.

Notably, money market analysts now anticipate the next U.S. interest rate cut in September, or possibly October, suggesting the Fed could implement a significant cut later this year—provided economic conditions permit.