Federal Reserve Chair Jerome Powell warned that the Iran conflict is likely to drive up inflation, complicating monetary policy decisions. The Fed held rates steady at 3.5-3.75% at its March meeting. US Consumer Sentiment fell to 53.3 in March, a three-month low, while inflation expectations jumped to 3.8% from 3.4%. The OECD forecasts 4.2% US inflation rate for 2026. Markets are now pricing in a 52% probability of a Fed rate hike by year-end - the first time above 50%. The 10-year Treasury yield climbed to 4.46%, the highest since July 2025. Chicago Fed President suggested rate hikes could be possible if inflation spirals. Fed officials describe economic fog making policymaking difficult.