The Federal Reserve on Wednesday kept its benchmark interest rate at a range of 3.5% to 3.75%, marking the second consecutive meeting in which monetary policymakers left rates unchanged.

The decision by the Federal Open Market Committee came as the central bank weighs conflicting pressures: inflation that has run above its 2% target for five years and is now being pushed higher by energy costs from the Iran war, alongside a labor market that has sent mixed signals, with a relatively strong January jobs report followed by a weaker February.

\\"Available indicators suggest that economic activity has been expanding at a solid pace,\\" the FOMC said. \\"Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate.\\"

Fed Chair Jerome Powell was expected to emphasize during his afternoon news conference the need for more time to assess how long the U.S.-Israeli conflict with Iran will last and how it might affect both growth and inflation, according to Bloomberg. Economists surveyed by Bloomberg expect officials to pencil in two quarter-point rate cuts for 2026, up from the single cut projected in December.

The rate decision follows a wholesale inflation reading that came in well above forecasts, prompting futures markets to move any expected rate cut to December at the earliest. Odds of a reduction at the December meeting fell to about 60%, according to CNBC. The shift is significant: As recently as before Feb. 28, markets had fully priced in rate reductions at the June and September meetings.

\\"Whenever you have the Fed's dual mandate become a dueling mandate, there should be debate,\\" said Diane Swonk, chief economist at KPMG, according to Bloomberg. \\"The reality is that we don't have the luxury of other central banks of just looking through the inflation, given that we're five years in and the risks of it becoming more entrenched rise by the day.\\"

None of the recently released inflation data released so far captures price increases tied to the war, which has snarled the critical Strait of Hormuz and rattled global energy markets. Brent crude topped $108 a barrel Wednesday morning after Israel struck Iranian gas infrastructure.

This is a developing story and will be updated.