Fed officials huddle under pressure from Iran war, Trump’s rage

The Federal Reserve will hold its March policy meeting under intense political pressure from President Trump and the economic blowback of the war with Iran.

After keeping borrowing costs steady in January, members of the Fed’s rate-setting committee are set to meet Tuesday and Wednesday while facing a far more tumultuous economy and political climate.

Prices for crude oil, gasoline, natural gas and fertilizer have skyrocketed since the U.S. and Israel began their bombardment of Iran more than two weeks ago, which could both slow the economy and push inflation higher.

“The most important developments since the last FOMC meeting are the start of the war in Iran and the spike in oil prices,” wrote David Mericle, chief U.S. economist at Goldman Sachs global investment research, in an analysis.

“For the Fed, the war increases both the risk that earlier rate cuts will be needed to address labor market softening and the risk that a higher inflation path will delay cuts.”

At the same time, the Trump administration is ramping up its criminal investigation into the Fed — and its rage against Chair Jerome Powell — after suffering a key defeat last week. 

The swirling political and economic storms are unlikely to influence the Fed’s upcoming interest rate decision. The Federal Open Market Committee (FOMC) was expected to keep rates steady again this month, and the odds of a cut dropped sharply as oil prices rose, according to futures markets.

But those dual threats are raising tough questions for the Fed as it navigates the road ahead, along with growing uncertainty about who will be behind the wheel: Powell, or Trump’s nominee to replace him, former Fed board member Kevin Warsh.

“As long as the DOJ’s investigation into the Fed and Powell continues, it is unlikely that the Senate will........

© The Hill