--- title: "Federal Reserve's Barr: Middle East conflict adds uncertainty, \"holding steady\" is the optimal solution at present" type: "News" locale: "en" url: "https://longbridge.com/en/news/280723691.md" description: "Federal Reserve Governor Michael Barr stated that policymakers have the ability to keep interest rates unchanged, but factors such as the Middle East conflict complicate the ability to push inflation back to the 2% target. He emphasized that the current policy stance is conducive to assessing the economic situation and supports last week's decision to maintain the benchmark policy rate. Barr pointed out that the conflict could lead to rising energy prices, affecting inflation and economic activity, and stressed the importance of controlling public expectations for future inflation" datetime: "2026-03-27T03:45:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280723691.md) - [en](https://longbridge.com/en/news/280723691.md) - [zh-HK](https://longbridge.com/zh-HK/news/280723691.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/280723691.md) | [繁體中文](https://longbridge.com/zh-HK/news/280723691.md) # Federal Reserve's Barr: Middle East conflict adds uncertainty, "holding steady" is the optimal solution at present According to the Zhitong Finance APP, Federal Reserve Governor Michael Barr stated that policymakers are fully capable of keeping interest rates unchanged, but factors such as the Middle East conflict complicate the Fed's ability to push inflation back to the 2% target. Barr emphasized that the impact of tariffs on inflation may persist beyond this year, while also noting that inflation in non-housing services and core inflation excluding volatile food and energy categories remain elevated. In a speech on Thursday at the Brookings Institution in Washington, Barr said, "Given the considerable uncertainty regarding the potential impact of developments in the Middle East on the U.S. economy, along with other factors I mentioned, it is reasonable to take some time to assess the situation. Our current policy stance puts us in a favorable position to maintain stability while evaluating data, changing forecasts, and balancing risks." The Federal Reserve kept the benchmark policy rate unchanged for the second consecutive time last week, and Barr expressed support for this move. Policymakers pointed out that uncertainty in the economic outlook has intensified, partly due to the war between the U.S. and Iran leading to a significant rise in oil prices. Barr stated that if the conflict ends quickly, the impact on inflation and economic activity may be limited. "But if the conflict persists for a while, the surge in energy prices and other commodities could have a broader impact on prices and economic activity," he said. "We have already experienced five years of high inflation, and short-term inflation expectations are rising again, so I am particularly concerned that another price shock could elevate long-term inflation expectations." Central bank officials believe that controlling public expectations for future inflation is crucial for curbing price pressures. Meanwhile, he noted that a lower and stable unemployment rate reflects a balance between job creation and a shrinking labor force. "However, low levels of hiring may make the labor market vulnerable to shocks, so it is necessary to remain vigilant about labor market conditions," he said. ## Regulatory Changes Barr also criticized a series of actions promoted by Federal Reserve Vice Chair for Supervision Michelle Bowman aimed at reducing bank regulation, including plans to ease capital requirements for large banks. Barr, who held the position before Bowman, stated that the cumulative effect of these changes "will reduce the resilience of the banking system." 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