Iranian Attack Repercussions Raise Doubts Over Fed Rate Cuts Until 2026

The geopolitical repercussions of the recent Iranian attack have triggered a significant shift in monetary policy expectations, raising serious doubts about whether the Federal Reserve will be able to cut interest rates even by 2026. Sustained high oil prices and energy costs are fueling fears of long-term structural inflation, complicating the central bank's mission to stabilize prices. Analysts suggest that this tense geopolitical landscape may enforce a 'higher-for-longer' interest rate environment that extends far beyond previous 2024 projections. These developments are weighing on major indices like the SPY and QQQ, while the US Dollar (DXY) and Treasury yields (US10Y) continue to benefit from hawkish expectations. Markets are now closely monitoring how these persistent inflationary pressures will shape the long-term macroeconomic trajectory. This shift reflects deep concern within financial circles regarding the sustainability of restrictive monetary policy.