3 Things That Are Making Investors Panic After the Fed Holds Interest Rates
Jakarta – The US Federal Reserve’s decision to maintain its benchmark interest rate at 3.5 to 3.75 per cent amid the intensifying Iran conflict has triggered anxiety among market players.
Fed Chair Jerome Powell repeatedly emphasised that the economic impact of the Iran war remains difficult to predict. Global stocks plummeted and continued to erode until the close of trading on Thursday, 19 March 2026.
“The Fed seems frozen. We are in a situation where risks are increasing extremely, and the main question is when the Strait of Hormuz will reopen,” said Heather Long, Chief Economist at Navy Federal Credit Union, quoted from CBS News on Friday, 20 March 2026.
As is known, around 20 per cent of the world’s oil supply is transported through the Strait of Hormuz, which is now disrupted due to geopolitical conflict. This condition exacerbates global uncertainty, particularly regarding inflation and economic growth.
In addition to global uncertainty, the Fed’s decision to hold interest rates has also made investors uneasy. Here are the three main reasons why investors are increasingly worried.
- The Fed Is Seen as “Frozen” Amid Uncertainty
In the press conference, Powell used the phrase “we don’t know” 14 times and the words “wait and see” four times. One of them: “The economic impact could be greater, could be smaller, could be much smaller or much greater. We don’t know at all,” Powell said.
According to Gregory Daco, Chief Economist at EY-Parthenon, the Fed is deliberately not rushing to change policy amid an unclear situation. He emphasised that the biggest question mark amid rising economic risks is when the Strait of Hormuz will reopen.
Meanwhile, Tim Duy, Economist at SGH Macro Advisors, even described the Fed as “trapped in the spotlight” due to simultaneous inflationary pressures and geopolitical conflict. In the latest economic summary, the Fed projected slightly higher inflation by the end of this year.
- Chances of Interest Rate Cuts Are Getting Slimmer
Powell’s statements have led markets to doubt the chances of interest rate cuts this year. Previously, investors expected the Fed to cut rates one to two times.