Opinion > Opinions - Finance The views expressed by contributors are their own and not the view of The Hill The Fed cannot fix what it did not break by Patrick T. Harker, opinion contributor - 03/15/26 9:00 AM ET by Patrick T. Harker, opinion contributor - 03/15/26 9:00 AM ET Share ✕ LinkedIn LinkedIn Email Email Traders work on the floor of the New York Stock Exchange (NYSE) on March 09, 2026 in New York City. The Dow was down over 700 points in morning trading as global markets continue to react to events in the Middle East. (Photo by Spencer Platt/Getty Images) The Federal Reserve is facing enormous pressure to cut interest rates. The U.S. and Israel are conducting an active military campaign against Iran, oil prices have surged  past $100 a barrel , Strait of Hormuz traffic has  ground to a near halt  and markets are repricing the global inflation outlook in real time.  The most recent  Bureau of Labor Statistics report  shows that the American economy shed 92,000 nonfarm payroll jobs in February, the third monthly loss in five months, while the unemployment rate ticked up to 4.4 percent.  As former president of the Federal Reserve Bank of Philadelphia and a voting member of the Federal Open Market Committee, my view is that the Fed should hold rates where they are — not because jobs don’t matter, but because the forces driving today’s labor market troubles and inflation surge are almost entirely beyond the reach of monetary policy. Start with the war. Roughly one-fifth  of the world’s daily oil supply and a comparable share of its liquefied natural gas passes through the Strait of Hormuz. Its effective closure is not a monetary event; it is a supply shock that operates through higher energy prices, compressed real incomes and disrupted supply chains.  Analysts at Goldman Sachs warn that if disruption persists and oil is above $100 per barrel, global inflation could rise by nearly a full percentage point. European natural gas prices briefly doubled . Former Treasury Secretary Janet Yellen has already stated  that the Iran conflict puts the Fed “even more on hold, more reluctant to cut rates.” Minneapolis Fed President Neel Kashkari called  it “a potentially new shock hitting the global economy.” Every $10 increase in the price of a barrel of oil adds roughly 0.2 percentage points to consumer prices. A central bank that cuts rates in the middle of that is cutting rates into an accelerating inflationary environment — the very definition of a policy error. Now turn to the  jobs report . Look carefully at what drove February’s losses. Federal government employment fell by another 10,000 and is now down 330,000 or 11 percent from its October 2024 peak, as deferred resignations have rolled through payrolls. The information sector shed another 11,000 jobs, continuing a trend that has cost the industry an average of 5,000 positions a month. These are workers displaced by deliberate policy choices and by technology. A rate cut will not rehire a federal employee whose position was eliminated, nor restore a job that has been automated. The broader structural picture reinforces this diagnosis. Demographics are compressing the labor pool as baby boomers  retire in large numbers . Immigration restrictions have removed a significant share of the workforce; the Penn Wharton Budget Model  estimates  that even a four-year enforcement scenario reduces GDP by 1 percent and raises federal deficits by $350 billion. Tariffs, now running at an effective rate  roughly five times higher than two years ago , are a supply shock that simultaneously raises consumer prices and eliminates jobs. None of these forces responds to the federal funds rate. Meanwhile, inflation has not cooperated. Personal consumption expenditures inflation ran at  2.9 percent  for 2025, nearly a full percentage point above the Fed’s target, and core services remain stuck near  3.5 percent . Tariff pass-through will push prices higher in the months ahead. The Iranian oil shock will push them higher still.  Milton Friedman warned us about this trap. His  1968 address  to the American Economic Association warned that attempting to push unemployment below its natural rate through monetary stimulus leads to accelerating inflation without durable employment gains.  The Fed’s dual mandate assumes that price stability and maximum employment generally move together. Stagflation and an oil shock break that assumption. When the two prongs conflict, the Fed’s comparative advantage is clear: it controls inflation. It does not control the budget, immigration policy, trade policy, the pace of AI adoption or whether the Strait of Hormuz is open. There is also a fiscal dimension. Total federal indebtedness (including implicit obligations) stands at roughl