Soaring oil prices are threatening to derail US economic growth and derail Federal Reserve plans for interest rate cuts, economists warn. US oil prices have jumped nearly 50% since military strikes on Iran to about $95 a barrel, with gasoline prices hitting their highest levels since President Trump's first term.

A Clark Center survey found that 68% of economists expect GDP growth to fall by 0.25 to 0.5 percentage points if oil remains at $100 per barrel through 2026. The Strait of Hormuz, through which a fifth of global oil flows, has been largely closed by Tehran in retaliation for the strikes.

This contrasts sharply with White House claims that the conflict will have minimal economic impact. The Fed now faces a difficult balancing act between fighting inflation and supporting a labor market that lost 92,000 jobs in February. With PCE inflation at 2.8% and markets betting the next rate cut won't come until spring 2026, economists say the central bank will likely hold rates steady at its Wednesday meeting.