Donald Trump has made no secret of his desire for lower interest rates. He’s long criticized the Federal Reserve for keeping borrowing costs too high, arguing that rate cuts would energize the economy, boost markets, and weaken the dollar — a trio of outcomes that could be politically favorable as the 2024 campaign heats up. But the geopolitical chessboard just threw in a wild card: renewed tension between Iran and Israel. Crude oil prices are already reacting, bouncing back into the $70 range. And if this skirmish escalates or drags on, analysts warn we could easily see oil soar to $100–120 per barrel. That kind of move doesn’t just pinch at the pump — it revives inflation fears across the board. **Here’s the catch**: inflation is the Fed’s kryptonite when it comes to rate cuts. Jerome Powell and company won’t slash rates in the middle of an inflationary spike, especially one driven by energy prices. So ironically, a more aggressive U.S. stance in the Middle East — which might be Trump’s geopolitical preference — could directly undermine his monetary goals.

Still, it’s worth noting that most oil shocks from geopolitical flare-ups tend to be short-lived. Unless this escalates into a full-blown war or a major disruption to global supply, markets usually cool off once headlines fade. Traders have a short memory. So while short-term inflation risk is real, it may not be enough to fully derail the Fed’s potential pivot. Unless the Middle East situation spirals, Trump’s low rate vision might still be intact — but with a few more bumps along the way than he’d like.

Is Trump’s Low Interest Rate Dream at Risk from the Iran–Israel Tension?