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With prolonged US-Iran tensions driving up oil prices, the Bank of Japan and the Federal Reserve have kept interest rates unchanged due to concerns over inflation and economic slowdown.

Interest Rates Held Amid Middle East Instability

As the US and Israel's attack on Iran continues for a third week, crude oil prices remain elevated. Amid this uncertain Middle East situation, the Bank of Japan and the US Federal Reserve (FRB) both decided to keep their benchmark interest rates unchanged at their respective monetary policy meetings this week. This decision reflects concerns about both accelerating inflation and economic deterioration.

Addressing Inflation and Economic Downturn Risks

The decision to freeze interest rates indicates that central banks are grappling with two conflicting risks: accelerating inflation and an economic slowdown. Rising oil prices act as an inflationary pressure, potentially fueling price increases. However, they can simultaneously negatively impact business activities and consumer sentiment, leading to an economic downturn. Therefore, central banks in each country are seen to be seeking a cautious response to complex economic instability factors.

*Source: YouTube: TBS NEWS DIG (2026-03-21)*

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