Waller: The Iran war may impact inflation, interest rate cuts should be approached with caution

Federal Reserve Governor Waller stated that the energy shock triggered by the Iran war could have a lasting impact on inflation, and he takes a cautious stance on cutting interest rates in the short term. He pointed out that if the Strait of Hormuz returns to normal, inflation may fall back to the 2% target, and rate cuts could be implemented when the job market weakens. However, he warned that if the conflict becomes protracted, high energy prices could spill over into other prices, limiting the scope for policy response, and it may be necessary to maintain current interest rate levels to address inflation risks.