Washington —
The Federal Reserve’s response to the US-Israeli war on Iran largely hinges on how the conflict affects Americans’ expectations about inflation, Chair Jerome Powell said Monday.
“The tendency is to look through any kind of a supply shock,” he said during a moderated conversation hosted by Harvard University. “But a critical, essential aspect of that is you have to carefully monitor inflation expectations.”
The Fed chief also hinted at keeping interest rates unchanged in the short term, looking through the ongoing global energy price shock: “Monetary policy works with long and variable lags, famously,