Fed Chair Powell Says Iran War Will Spike Inflation In The Near Term, But Too Soon To Assess Impact

Federal Reserve Chair Jerome Powell said on Wednesday that the increase in oil prices due to the war in Iran, and President Trump’s tariffs would impact inflation.

In his remarks after the Fed's policy meeting, Powell said that the Middle East conflict would increase inflation in the near term. “Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East,” he said.

“In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy,” the Fed chair added.

Powell also noted the jump in goods inflation because of the tariffs, adding that energy price increases would not stoke inflation in isolation.

“The thing that’s really important that we see this year, is progress on inflation through a reduction in goods inflation as the one time effects on prices of tariffs, go through the system, go through the economy. That’s the main thing we’re looking for,” he said.

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