Yesterday evening at 8:00 PM Washington time, as European markets were closing their doors and Asia was preparing for a new session, the US Federal Reserve delivered its verdict: interest rates remain unchanged. Officially, it's the war in Iran that justifies this caution. Unofficially, it's the admission of an institution that has lost control of its own monetary policy.
Impotence Disguised as Wisdom
"I'm still gobsmacked by the Fed's decision," confides Bob Michele of JPMorgan Asset Management, according to Bloomberg. This stupefaction is not trivial. It reflects the unease of a financial community discovering a Fed transformed into a spectator of the global economy rather than an actor in the American economy.
Read more: breaking analysis justiceAfter all, since when has American monetary policy been decided based on Middle Eastern conflicts? Read more: powell capitulates trump Since central bankers abandoned their economic compass to navigate by sight according to geopolitical upheavals. This March 18, 2026 decision marks a turning point: the Fed no longer steers, it suffers.
Asian markets, which will open in a few hours in Tokyo (9:00 AM JST) and Shanghai (9:30 AM CST), will discover a monetarily paralyzed America. While Beijing and Tokyo adjust their policies according to their own economic imperatives, Washington waits to see how a conflict 10,000 kilometers from its borders evolves.
The Real Losers of This Inaction
Behind this displayed caution hide assumed political choices. By maintaining rates, the Fed favors holders of financial assets at the expense of borrowers and growing companies. The wealthy, who benefit from high bond yields, applaud. American SMEs, strangled by credit costs, pay the price.
This status quo policy also benefits banks, which maintain their intermediation margins without taking risks. JPMorgan, whose analyst Bob Michele expresses his "stupefaction," is among those establishments that prosper in monetary immobilism. Curious coincidence.
According to data reported by CNBC, American inflation remains under control despite geopolitical tensions. So why this timidity? Because the Fed prefers inaction to action, wait-and-see to courage. It transforms geopolitical uncertainty into an excuse for not assuming its economic responsibilities.
The Trap of Monetary Geopoliticization
This decision reveals a deeper phenomenon: the geopoliticization of monetary policy. Since 2008, central banks have gradually abandoned their role as economic institutions to become geopolitical actors. They no longer look at the fundamentals of their national economies, but at international tensions.
Result: when Europe closes its markets at 5:30 PM CET and Wall Street closes at 4:00 PM ET, American monetary decisions are already influenced by what's happening in Abu Dhabi (closing at 2:00 PM GST) or what's expected in Tokyo. This permanent interconnection transforms the Fed into a hostage of global events.
The irony is striking: the institution that claims to defend the independence of American monetary policy submits to international geopolitical vagaries. It abandons its economic sovereignty in the name of geopolitical prudence.
The Real Economy Held Hostage
While the Fed procrastinates, the American economy continues to run. Companies invest, consumers consume, workers work. But all suffer the cost of this inaction: high rates that slow investment, penalize innovation, and maintain unemployment at artificially high levels.
This "prudent" monetary policy is only prudent for those who don't need credit. For others – entrepreneurs, young households, growing companies – it's a policy of programmed recession. The Fed socializes geopolitical risks and privatizes financial benefits.
European markets, which will reopen tomorrow morning (9:00 AM CET in Paris and Frankfurt, 8:00 AM GMT in London), will discover a monetarily frozen America. They will draw their own conclusions about American economic leadership capacity.
The Admission of Failure
This March 18, 2026 decision will remain as the admission of failure of an institution that has lost its reason for being. The Fed no longer makes monetary policy, it makes monetary geopolitics. It no longer defends the American economy, it protects its own reputation.
Bob Michele is right to be "gobsmacked." Not by the surprise of this decision, but by the confirmation that the world's leading central bank has renounced its role. When monetary policy is decided based on external conflicts rather than internal needs, it means the institution has lost its way.
Tomorrow, when Asian markets open, they will discover an America that has chosen immobilism out of fear of action. A lesson that Beijing and Tokyo will not fail to remember for their own monetary policies. American economic hegemony is not lost in wars, it dissolves in indecision.
Frequently Asked Questions
Q: Why did the Federal Reserve decide to keep interest rates unchanged?
The Federal Reserve decided to keep interest rates unchanged due to the ongoing war in Iran, which has led to a cautious approach in monetary policy. This decision reflects a broader trend where geopolitical events are influencing economic decisions, indicating a shift in the Fed's role from an active to a more passive participant in the economy.
Q: How does the Fed's decision impact American small businesses?
By maintaining interest rates, the Fed is favoring holders of financial assets, which can negatively impact American small businesses. These businesses often struggle with high credit costs, making it more difficult for them to grow and compete in the market.
Q: What are the implications of the Fed's cautious monetary policy?
The Fed's cautious monetary policy benefits wealthy investors and banks while putting pressure on borrowers and small businesses. This status quo allows banks to maintain their profit margins without taking risks, but it can hinder economic growth and innovation in the broader economy.