How Do the Federal Interest Rates Affect COLA? - wallst.com
The rising cost of gas due to the conflict in Iran is raising the cost of living (COLA). Normally, the Fed cuts rates to stimulate the economy. March inflation rose 3.3% per the Consumer Price Index (CPI), mainly due to the increasing oil prices, and higher inflation makes rate cuts less likely since the central bank targets 2% inflation.
The fact that the COLA is rising at this rate due to the Iranian conflict doesn’t mean it will last, and that you will get a larger COLA increase next year than you did in 2026. The CPI-W, Consumer Price Index for Urban Wage Earners and Clerical Workers, is based on the third quarter (July, August, and September) compared with the third quarter of the prior year.
The COLA increase for 2027 won’t be released until around October 15th, 2026. A lot can change between now and then.
Maurie Backman’s article explains how FED interest rates do not directly affect COLA. Read the full article here …
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