Amid escalating tensions between the US and Israel in the Middle East, renewed inflation concerns, a softening job market, and uncertainty surrounding tariff policy, the Federal Reserve will hold its Federal Open Market Committee (FOMC) meeting next week and announce its interest rate decision. The federal funds rate, set by the FOMC, is the benchmark overnight lending rate among banks, but its impact gradually spreads to consumer borrowing and savings rates.

Currently, experts generally believe that the Federal Reserve will maintain interest rates unchanged.

The CME Group’s FedWatch Tool shows that futures market pricing has barely factored in the possibility of an interest rate cut.

Moody's chief economist Mark Zandi said, "Fed officials will hold rates steady until they have a clear assessment of the trajectory of the war with Iran and the dual mandate of low, stable inflation versus full employment." He added, "This could take weeks, or even two to three months."

Consumers are unlikely to receive short-term relief, and soaring energy costs are exacerbating their living pressures.

For ordinary consumers, it is unlikely that the Federal Reserve will intervene to rescue the market in the short term.

"Anyone expecting the Fed to come to the rescue anytime soon is likely to be disappointed," said Matt Schulz, chief credit analyst at LendingTree.

"The attack on Iran has made life more expensive and uncertain for the average American family," noted Brett House, an economics professor at Columbia Business School. He added that soaring oil and gasoline prices have also driven up the 10-year Treasury yield (the benchmark for mortgages).

The latest data from the U.S. Bureau of Labor Statistics shows that the Consumer Price Index (CPI) rose 2.4% year-on-year in February. However, this data was released before the outbreak of the Iran-Iraq War, after which energy prices surged, further exacerbating concerns about long-term inflation. Economists say that higher oil prices will further complicate the inflation landscape in the coming months through airfares, shipping, and other costs.

Brent crude futures touched $100 a barrel again on Thursday. According to data from the American Automobile Association (AAA), the average gasoline price across the U.S. rose to $3.59 a gallon, a 22% increase from a month ago. Inflationary pressures following the conflict with Iran pushed the benchmark 10-year U.S. Treasury yield to 4.173%, directly impacting mortgage rates.

Brett House stated, "This war has not made life more affordable for ordinary Americans."

The "Rocket and Feather" Effect: Oil Price Decline May Be Lagging Behind

Even if the war ends “soon,” as President Trump has stated, the decline in oil prices may lag behind. Sung Won Sohn, Professor of Finance and Economics at Loyola Marymount University and Chief Economist at SS Economics, noted in a research report on Wednesday that this is known as the “rocket and feather” effect: “Gasoline prices rise like a rocket, but fall as slowly as a feather.”

He explained that fuel distributors purchase gasoline from refineries and store it before selling it to consumers. Even with a stable crude oil supply, they may still be absorbing high-priced inventory. "Gas station prices will gradually, rather than immediately, fall back until the inventory is replaced by cheaper fuel."

Pressure on people's livelihoods was already evident before the war, and employment data further deteriorated.

Even before the escalation of the US-Israel war against Iran sparked inflation concerns, high living costs and a weak labor market in the United States had already put many families in dire straits. The Bureau of Labor Statistics reported on Friday that the US economy lost a net number of jobs in February, with the unemployment rate rising to 4.4%.

"The Fed and Treasury may be exploring options to ease household burdens, but the available tools are limited," said Stephen Kates, a financial analyst and certified financial planner at Bankrate. He added, "The Fed's mission has become more complicated. Despite signs of weakness in the labor market in February, concerns about accelerating inflation will likely keep interest rates unchanged at the Fed's next two meetings."

Overall , the energy price shock and rising inflation expectations triggered by the Iran war are significantly altering the Federal Reserve's policy path. The initial expectation of a June rate cut has largely failed to materialize, and the market is currently pricing in almost no short-term easing. The Fed needs to weigh the dual pressures of rising inflation risks and weak employment, with developments in the Middle East becoming a key variable. If the conflict de-escalates rapidly, a drop in oil prices could reignite expectations of further easing; conversely, if the energy crisis persists, the Fed will be more inclined to prioritize combating inflation.

Investors and consumers need to closely monitor next week's FOMC meeting statement and interest rate decision, as well as the latest developments in the Middle East, to assess the real possibility of a shift in monetary policy. In the short term, the pressure of high oil prices and the cost of living faced by ordinary households is unlikely to ease quickly.