The US Federal Reserve on Wednesday kept its benchmark interest rate unchanged at 3.5%-3.75% as policymakers weighed the impact of rising geopolitical tensions in the Middle East alongside signs of moderating economic momentum. The decision was widely expected, with markets factoring in a pause as oil price volatility linked to the Iran conflict raises fresh concerns around inflation while growth indicators show early signs of softening. The Fed revised its outlook for its preferred inflation measure, projecting it at 2.7% by the end of 2026, citing potential price shocks from the war in Iran. In its Summary of Economic Projections, the Fed raised its forecast for headline PCE inflation from 2.4% to 2.7%. Core inflation, which excludes volatile items, was also revised upward from 2.5% to 2.7%.