When the Strait of Hormuz is blocked, the Federal Reserve is directly faced with a dilemma: preserve jobs or control inflation? This choice is even harder than deciding on interest rate hikes itself.

Federal Reserve Board Member Waller stated that due to the energy shock caused by the Iran conflict, he is cautious about a short-term rate cut and warns that the conflict could keep inflation persistently high.
He proposed two scenarios: if the Strait of Hormuz reopens and energy and trade recover, inflation would fall back to 2% and he would lean towards a rate cut later this year to support the labor market; if oil prices remain high and the labor market remains weak, policy space is limited, requiring a trade-off between higher inflation and a weaker labor market, and if inflation risks exceed labor market risks, he would maintain the current rate.