Israel-Iran tension unlikely to sway Federal Reserve's decision originally appeared on TheStreet .
The Federal Reserve is set to hold the next meeting on June 17 to June 18. Now, markets seem remarkably calm in light of rising tensions in the Middle East and a potentially historic Federal Reserve decision that could alter the financial landscape later this week.
As Israel and Iran exchange airstrikes for the fourth day, investors follow both the battlefield and boardrooms.
Israeli airstrikes that have targeted Iranian energy targets have not done enough to provoke a response from Iran, including airstrikes against oil shipping or targeting Iran's supreme leader, Ayatollah Khamenei.
While it is not entirely clear what led to the airstrikes, a Reuters report indicated that U.S. President Donald Trump discouraged any direct attempt against Khamenei, lest it further escalate the conflict.
However, the geopolitical situation has not shaken markets as much as they had anticipated.
In fact, according to crypto prediction marketplace Polymarket, traders are assigning a 97.5% probability that rates will remain unchanged at the Fed's meeting on Wednesday, despite the brief rise in oil and the unfolding ambiguity in the political situation.
But oil prices tumbled $1 per barrel on Monday after talks that Iran is seeking a truce with Israel, alleviating concerns over regional petroleum supply. Trump told the media:
"They'd [Iran] like to talk. They should have done that before. They have to make a deal, and it's painful for both parties, but I'd say Iran is not winning this war."
Fed's cautious stance
Now, investors are awaiting the Federal Reserve's decision on the central bank meeting tomorrow. The Fed is set to hold a two-day meeting to discuss potential rate cuts amid softer inflation and easing economic conditions, despite current expectations of steady interest rates.
But crypto markets traded up. At press time, Bitcoin was at $108,007 (up 2.19% in 24 hours), Ethereum was at $2,641 (up 3.63%), and XRP was at $2.31 (up 6.86%).
The action is linked, in part, to hedging of risk and capital rotation out of equities, analysts believe.
However, the Federal Reserve is expected to consider an interest rate cut in December, with a 50/50 chance of a cut. The Israel-Iran conflict is regarded as a significant "wildcard", potentially causing an economic downturn, warned Jon Faust , a former advisor to Fed Chair Powell.
Moreover, the U.S. faces mounting international pressures at a meeting of the Group of 7 this week and a meeting of NATO next week.
Israel-Iran tension unlikely to sway Federal Reserve's decision first appeared on TheStreet on Jun 16, 2025
This story was originally reported by TheStreet on Jun 16, 2025, where it first appeared.
