The Iran war has scrambled the Federal Reserve's outlook on inflation and unemployment and will likely further delay interest rate cuts this year, putting off any relief for consumers struggling with high borrowing costs for home and car purchases. The spike in oil and gas prices presents already-divided Fed officials with a worst-case scenario as they conclude a key meeting Wednesday. Costlier gas will raise inflation in the short run, which typically causes the central bank to raise borrowing costs — or at least leave them unchanged. Yet if the spike is high enough or lasts long enough, it could hammer the economy and push up unemployment, which the Fed would typically respond to by cutting its key rate.

In a rare bipartisan effort for a deeply divided Congress, the Senate has passed a broad bill to make U.S. housing more accessible and affordable. The bill passed on Thursday would reduce regulations, regulate corporate investors and expand how housing dollars can be used to build affordable homes and rentals. It now heads back to the House, which passed a separate version earlier this year. It is unclear whether President Donald Trump would sign it after declaring last weekend that he won't sign any new measures unless Congress passes legislation that would require voters to show proof of citizenship.

A key measure of inflation fell to nearly a five-year low last month as apartment rental price growth slowed and gas prices fell, offering some relief to Americans still grappling with the sharp increase in costs of the past five years. Friday's report suggests inflation could be cooling, but it comes after the cost of food, gas, and apartment rents have soared since the pandemic, with consumer prices about 25% higher than they were five years ago. The increase in such a broad range of costs has become a high-profile political issue under the rubric of "affordability."

Central bankers from around the world have expressed full support for U.S. Federal Reserve Chair Jerome Powell. This comes after President Donald Trump escalated his confrontation with the Fed by threatening criminal charges. The central bankers, including European Central Bank President Christine Lagarde, emphasized the importance of central bank independence for economic stability. The dispute ostensibly centers on Powell's congressional testimony in June about renovation costs, but Trump has criticized Powell for not cutting rates faster. Economists warn that a politicized Fed could harm its credibility.

Inflation declined a bit last month as prices for gas and used cars fell, a sign that cost pressures are slowly easing. The Labor Department said Tuesday that consumer prices rose 0.3% in December from the prior month, the same as in November. Excluding the volatile food and energy categories, core prices rose 0.2%, also matching November's figure. Even as inflation has eased, the large price increases for necessities such as groceries, rent, and health care have left many American households feeling squeezed, turning "affordability" issues into high-profile political concerns.

The Federal Reserve's preferred measure of inflation slowed a bit in September, likely easing the way to a widely expected interest rate cut by the central bank next week. The data, which was delayed for five weeks by the government shutdown, show that inflation was muted in September and will bolster the case for a cut to the Fed's key interest rate at its next meeting Dec. 9-10.

The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated. The move comes amid a fraught time for the central bank, with hiring sluggish and yet inflation stuck above the Fed's 2% target. Compounding its challenges, the central bank is navigating without much of the economic data it typically relies on from the government. The Fed has signaled it may reduce its key rate again in December but the data drought raises the uncertainty around its next moves. Fed Chair Jerome Powell told reporters that there were "strongly differing views" at the central bank's policy meeting about to proceed going forward.

The government shutdown is delaying another major economic report, leaving policymakers at the Federal Reserve with a cloudier picture even as the economy enters a challenging phase of stubbornly persistent inflation and a sharp slowdown in hiring. The shutdown could make things worse for agencies like the Fed if it continues, because government agencies cannot collect the raw data that are then compiled into the monthly reports on jobs, inflation, and other economic trends.

Federal Reserve Chair Jerome Powell says that a sharp slowdown in hiring poses a growing risk to the U.S. economy. Powell's comments Tuesday suggest that the Fed will likely cut its key interest rate twice more this year. Powell said in written remarks that despite the federal government shutdown cutting off official economic data, "the outlook for employment and inflation does not appear to have changed much since our September meeting," when the Fed reduced its key rate for the first time this year.