I've been paying close attention to recent developments from the FRB. Chairman Hamak has said, “Given the current economic outlook, the FRB’s accommodative stance no longer fits.” In other words, it seems the era of financial easing is moving toward an end.

It’s not just that—Chairman Kashkari also holds a similar view. Even if the Strait of Hormuz were to reopen soon under a “convenient scenario,” the inflation rate would remain elevated, and it would be necessary to keep interest rates unchanged for a while. That means the rapid rate cuts the market is expecting aren’t coming.

More importantly, if a price shock large enough occurs, inflation expectations could be shaken, and the FRB may need to implement a series of rate hikes to maintain confidence in keeping its 2% inflation target. The same applies to the long-term closure of the strait—through a price shock, it could threaten inflation expectations, so “strong policy responses” may be required.

With this in mind, you can see that the basic thinking behind the FRB’s decision-making has been changing significantly. The market may not have fully priced in this shift yet, so it’s something to watch closely going forward.