The Strait of Hormuz is roughly 7,000 miles from the nearest American strip mall. The oil that isn’t flowing through it — blockaded since the Iran war began in late February — just dictated when millions of borrowers can expect relief. Not this year. Possibly not until 2027.

A Reuters poll of 103 economists, conducted April 17–21, found that a slim majority now expects the Federal Reserve to hold its benchmark rate steady at 3.50%–3.75% through September. As recently as early March, most forecasters expected a cut by June. The timeline has slipped three months in three consecutive surveys, each revision driven by the same force: crude oil prices that keep climbing as the conflict grinds on.

Brent crude topped $101 last week. West Texas Intermediate briefly spiked above $115 earlier in April before settling near $91, according to CNBC. The national average for a gallon of regular gasoline stands at $4.10, per AAA — a number that shows up not just at the pump but in the fine print of every adjustable-rate loan in the country.

The Numbers Behind the Hold

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, is now expected to run at an annualized 3.7% in the second quarter — roughly 30 basis points higher than forecasters projected in late March, according to the Reuters survey. The Fed’s target is 2%.

Research from the Federal Reserve Bank of Dallas, published April 17, quantifies the war’s inflationary bite with unusual precision. Under their baseline scenario — a one-quarter closure of the Strait of Hormuz, after which supply gradually recovers — fourth-quarter-over-fourth-quarter headline PCE inflation rises by 0.6 percentage points. Core inflation, which strips out food and energy, still takes a 0.2-point hit.

The effects are staggered. Headline inflation spikes at an annualized 1.7 percentage points in the first quarter of 2026 alone, driven almost entirely by energy costs. Core inflation’s drag arrives later — a 0.4-point bump in the second quarter — as higher fuel costs work their way through shipping, manufacturing, and services.

Oil goes up. Gasoline goes up. The cost of moving goods goes up. The cost of the goods themselves goes up. The Fed, tasked with keeping inflation near 2%, cannot cut rates while that chain reaction is still live.

Who Pays

The most immediate casualty is the housing market. Mortgage rates have climbed in tandem with the Fed’s hold, driving existing home sales in March to a nine-month low, according to CNBC. Anyone who bought or refinanced during the low-rate years of 2020–2021 and was hoping to move or reset their rate is now waiting on a waterway in the Persian Gulf.

Credit card borrowers face a similar bind. With the prime rate stuck at elevated levels, carrying costs on revolving debt aren’t shrinking. Every month the Fed stays put is another month of interest payments that don’t decline.

Emerging markets feel it differently but no less acutely. Dollar-denominated sovereign debt — the lifeblood of developing-world governments and corporations — becomes more expensive to service when US rates stay high. The FOMC’s March minutes note that the European Central Bank, the Bank of Canada, and the Swiss National Bank, all previously expected to hold or ease, are now anticipated to hike rates modestly. When the Fed doesn’t move, nobody moves — or everyone moves in the wrong direction.

The Political Overlay

Fed Chair Jerome Powell’s term expires in May. President Donald Trump has nominated Kevin Warsh as his replacement and has made no secret of his desire for lower rates. Warsh, in his Senate confirmation hearing on Tuesday, denied making promises to Trump but called for “regime change” at the Fed, according to Reuters.

Economists largely shrugged. “Warsh is just one voice and he would need to convince the committee if he were to come in with the idea of cutting quickly,” said Brett Ryan, senior US economist at Deutsche Bank. “He’s going to need some time to earn the credibility, the trust of the committee.”

Morgan Stanley’s chief US economist Michael Gapen offered the bull case: tariff inflation is transitory, oil pressure stays in headline numbers, and the Fed eases later this year. His caveat: “The main risk to our call is parts of inflation do not behave as favorably as we think they will and the Fed just stays on hold.”

What the War Wrote Into the Calendar

The uncertainty is not abstract. The Dallas Fed modeled three scenarios for the Strait of Hormuz. A one-quarter closure pushes WTI to a $94 peak. Two quarters: $104. Three quarters: $115. The difference between a rate cut in September and no cut at all may come down to whether cargo ships resume passage through a 21-mile-wide channel.

Goldman Sachs expects two cuts this year — September and December — arguing that fading tariff effects will offset energy pass-through. Market pricing is less sanguine, indicating no cuts until at least mid-2027.

Nearly a third of economists in the Reuters poll expect the Fed to hold all year, nearly double the share from the previous survey. The number has been growing. The war is writing itself into the calendar, one revised forecast at a time.

The costs — higher gas, higher borrowing, deferred home purchases, squeezed consumer margins — are real. They are also, in a strict legislative sense, unauthorized. No vote was held. No bill was signed. The Iran war’s inflationary cascade is a tax imposed by geopolitics and collected by the bond market.

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