Iran War Drives March Inflation, Fed Holds Rates

The conflict sent energy prices soaring by nearly 11 percent, with national average US gasoline prices surpassing $4 a gallon for the first time in four years, according to AAA data. This "war tax" also impacts grocery bills, which gained 2 percent over the last year, driven by increased trucking and fertilizer costs.

Brent Kenwell, US investment analyst at eToro, stated that while the data might not inspire the Federal Reserve to raise interest rates, it definitively means the Fed will not cut rates this year. Dean Baker, senior economist at the Center for Economic and Policy Research, noted that inflation pressures were already building before the war due to Trump administration tariffs and strong consumer demand.

Gasoline prices alone soared by a staggering 21.2 percent, according to the Bureau of Labor Statistics. Services inflation, a key measure for the Fed, rose 0.2 percent monthly and 3 percent over the past year.

Despite these pressures, stock markets reacted calmly, with all three major indices in the green.