Goldman Sachs has warned that potential Federal Reserve rate cuts in 2026 are uncertain due to ongoing peace talks aimed at ending the Iran War. The bank noted that the impact of the Middle East conflict on the Fed's policymaking is an inflation shock driven by energy prices rather than a demand-driven downturn. This has pushed inflation risks higher even as growth slows. Goldman also noted that if peace talks gain traction, the energy-driven price pressures will ease, leading to monetary policy “normalization” to resume. The benchmark Federal Funds Rate is currently 3.50% to 3.75% after the Federal Open Market Committee held the rate steady after its last two meetings.