Economics Professor: US-Iran Peace Agreement Could Change the Federal Reserve's Rate Hike Path

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Golden Finance reports that on June 18, economics professor Phil Powell said he expects the Federal Reserve to keep interest rates unchanged at this meeting. Powell stated that before a peace agreement between Washington and Tehran was reached, financial markets had been worried about inflation rising further, and inflation has already exceeded 4% due to a surge in oil prices. In the coming months, the Federal Reserve is more likely to raise interest rates rather than cut them. However, the Iran peace agreement is undoubtedly a major piece of positive news: oil prices could fall more than expected as a result, thereby reducing the likelihood of rate hikes in the near term. This is the first interest rate decision after Waller took office as Federal Reserve Chair. The market may think the new Fed Chair is more willing to cut rates than his predecessor, but it turns out that is not the case. The Fed’s decision is based on highly technical data and procedural considerations, not emotional ones. As for the outlook for rate cuts, Powell said that since inflation must first fall, it is unlikely that the Federal Reserve will lower interest rates before the end of this year.
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