The Globe and Mail reports in its Thursday edition that Federal Reserve officials anticipate the Iran war will worsen inflation this year but have little effect on economic growth. An Associated Press dispatch to The Globe reports that they kept short-term interest rates at about 3.6 per cent and indicated they still expect to cut rates once in 2026. The Fed acknowledged uncertainty regarding the impact of Middle East developments on the U.S. economy but believes the gas price spike will have a temporary effect. They also project that unemployment will remain stable by year's end and expect inflation to drop to 2.2 per cent in 2027, reaching the 2 per cent target in 2028. Fed chair Jerome Powell said higher oil and gas prices will raise inflation in the short term, but it is too early to assess their impact on the economy. Fed officials now project inflation to reach 2.7 per cent by year-end, slightly below January's 2.8 per cent and up from December's forecast. Core inflation, excluding food and energy, is also expected to finish at 2.7 per cent, revised from 2.5 per cent. While consumer prices may spike due to rising gas prices, they could stabilize by year-end, especially if the ongoing conflict resolves soon.