How the Fed is expected to maneuver interest rates in the wake of the war in Iran

A key question hangs over the Federal Reserve’s two-day meeting that ends Wednesday: Will central bank policymakers still reduce short-term interest rates this year, now that the Iran war has sent oil prices higher and gas prices spiking? Or will they have to stand pat for months to see how the conflict plays out?

Fed Chair Jerome Powell is almost certain to announce Wednesday that the central bank has kept its key rate unchanged for the second straight meeting at about 3.6%. But the Fed...