Amid multiple pressures including the ongoing conflict with Iran pushing up oil prices, rising inflation expectations, a weak job market, and uncertainty surrounding the prospects of Trump's tariff policies, the Federal Reserve concluded its two-day Federal Open Market Committee (FOMC) meeting on March 19, deciding to maintain the federal funds rate at 3.50%-3.75%. The Fed also raised its forecasts for future inflation and interest rate paths, indicating that policymakers are further tightening their expectations for further easing.

Federal Reserve Chairman Jerome Powell made it clear at the post-meeting press conference that the impact of oil prices was not the only factor to consider; the slow progress of tariff policies was also an important reason.

The Federal Reserve raised its inflation and interest rate forecasts, significantly delaying the path of interest rate cuts.

The Federal Reserve's Summary of Economic Projections (SEP) and "dot plot" show that core PCE inflation expectations have been revised upward to 2.7% from 2.5% in December. In the dot plot, several officials ruled out the possibility of multiple rate cuts this year, reducing the expected rate cuts for the year from multiple before the war to just one, with some even predicting a possible rate hike in 2027.

This adjustment primarily reflects the surge in oil prices and rising inflation expectations caused by the Iran war, while also including an assessment of the slow progress of Trump's tariff policies.

"Higher inflation forecasts also reflect the slow progress we've seen on tariffs," Powell said at a press conference. He added that the Fed is comprehensively assessing the dual mandate of the war with Iran on prices and employment, given the current highly uncertain environment.

Walsh will also face significant resistance if he takes office quickly.

Kevin Warsh, Trump's nominee to succeed him as Federal Reserve chairman, has clearly favored significant interest rate cuts to align with Trump's long-standing demands.

However, signals from this meeting indicate that the Federal Reserve holds a cautious, even hawkish, stance on interest rate cuts. Warsh, as chairman, has only one of the twelve votes and needs to persuade a majority of committee members to support his policy direction.

However, most officials are currently setting higher thresholds for easing by raising inflation expectations and tightening interest rate paths.

North Carolina Republican Senator Thom Tillis has publicly pledged to block Warsh's nomination from proceeding before the Senate Banking Committee until the criminal investigation into Powell's Federal Reserve headquarters renovation project is fully concluded.

A federal judge last week dismissed the subpoena for the Federal Reserve, and the Justice Department said it would appeal. As long as the investigation continues, Powell will remain chairman, the process of Warsh's succession is stalled, and the Fed's policy path is unlikely to see a significant shift in the short term.

The triple pressures of oil prices, inflation, and tariffs have nearly eliminated the room for interest rate cuts.

The war with Iran has effectively closed the Strait of Hormuz, causing the largest disruption to global oil supplies in history. Brent crude oil prices have broken through $100 per barrel, and inflation expectations have risen significantly.

The Federal Reserve faces the dual pressures of rising energy-driven inflation and slowing economic growth. Powell emphasized, "Nobody knows how big the economic impact will be; it could be bigger, it could be smaller, it could be much bigger or much smaller than expected."

The slow progress of Trump's tariff policies has also exacerbated inflationary pressures. Although the Supreme Court recently ruled some tariffs illegal, the government has instead invoked other powers to reinstate them.

The Federal Reserve believes that the combined effect of imported inflation from tariffs and the impact of oil price shocks has further reduced the room for monetary easing.

The market has completely abandoned expectations of a short-term interest rate cut.

The CME FedWatch Tool indicates a greater than 99% probability that interest rates will remain unchanged at this meeting. Expectations for rate cuts throughout the year have been reduced from multiple cuts before the war to a single one, with the timing pushed back to September or October. Market hopes for further Fed easing have been largely dashed.

Overall , the energy shock triggered by the Iran war, rising inflation expectations, and the continued impact of Trump's tariff policies are forcing the Fed to maintain a cautious stance at this week's policy meeting. If Warsh were to take office quickly, he would also face hawkish resistance within the committee, making it difficult to quickly push for significant rate cuts. With Powell's term extended to May, a significant shift in the Fed's policy path is unlikely in the short term.

Investors need to closely monitor the Fed's assessments of inflation and employment, the latest developments in the Middle East, and the confirmation process for Warsh's nomination. These factors will directly determine the future direction of monetary policy and the trend of global asset prices. In the short term, the Fed is highly likely to maintain high interest rates, and the relative strength of the US dollar may continue, while the stock market and growth stocks will face greater pressure.