Lead Federal Reserve officials will convene this week in what could be Jerome Powell's final meeting as Fed chair, as oil prices remain elevated amid the Iran conflict. The decision on whether to signal potential rate hikes will hinge on the inflation outlook and the continued supply chain disruptions. Context The Fed has kept its benchmark overnight rate steady in the 3.50%-3.75% range since December, while Brent crude has climbed roughly 50% since the war began on February 28. The U.S. has blocked Iranian vessels from the Strait of Hormuz, tightening global oil supply and feeding higher gasoline and energy costs that pushed the U.S. CPI to its largest increase in nearly four years. Key Data Brent crude futures have risen about 50% since the start of the conflict, and pre-war oil prices hovered near $70 a barrel. The Fed's policy rate remains at 3.50%-3.75% and is expected to stay there through at least the middle of 2027. Inflation is running about 1% above the Fed's 2% target, and the central bank has paused rate cuts since December. Quotes Fed Governor Christopher Waller warned that the longer energy prices stay elevated, the greater the chances that higher inflation will become entrenched across a wide range of goods and services. St. Louis Fed President Alberto Musalem noted that an extended period of high oil prices could raise core inflation and that the risk of de-anchoring inflation expectations would become relevant. Bank of America economists wrote that the Fed will stay firmly on hold at its April meeting, although the forward-guidance language could signal a potential shift. Outlook With oil supply constraints still in place, the Fed is likely to keep rates steady for the near term, but it must remain vigilant for any signs that inflationary pressures could intensify.