Federal Reserve Cleveland President: The impact of the Iran war is still difficult to assess, supporting interest rates to remain unchanged for a long time

Federal Reserve officials remain vigilant about the escalating situation in the Middle East and are not in a hurry to adjust their monetary policy stance in the short term. Cleveland Fed President Beth Hammack stated in an interview with The New York Times on Wednesday that it is still too early to assess the impact of the Iran war on the U.S. economy and clearly supports keeping interest rates at current levels "for quite a long time." As Hammack made her remarks, Federal Reserve officials began evaluating the potential risks posed by the escalation of the Middle East conflict this week. Analysts believe that this conflict could simultaneously exert pressure on U.S. inflation and economic growth in the near term, although the U.S. economy has shown relative resilience to energy price shocks. Interest Rate Stance: No Easing for Now, Focus on Controlling Inflation Hammack clearly stated that in the context of high inflation and a relatively stable labor market, the Federal Reserve should focus its policy on suppressing inflation. "It is crucial to ensure that policies remain at levels that can drive inflation back to target while also considering potential weaknesses in the labor market," she said. Regarding the inflation trajectory, Hammack expects price increases to gradually decline this summer, but forecasts that they will remain above target levels until the end of the year. This assessment implies that the Federal Reserve will find it difficult to gain the confidence needed for interest rate cuts for quite some time. Bidirectional Risks: Labor and Inflation Both in View Hammack also pointed out that the direction of monetary policy adjustments will depend on the trends in economic data, with a bidirectional possibility for the policy path. "If we see more signs of weakness in the labor market, it may indicate the need for more easing; if inflation does not converge towards the target as expected, it may mean the need to impose more restrictions on the economy," she stated. This statement indicates that Hammack is not unconditionally committed to high interest rates, but current data is insufficient to trigger a policy shift, and Fed officials prefer to wait for clearer signals before making decisions. Middle East Situation: Rising Risks, Early Assessment According to Reuters, Federal Reserve officials began examining the potential impacts of the escalating Middle East conflict on Tuesday, which is believed to potentially exert pressure on U.S. inflation and economic growth in the near term. However, Hammack clearly stated that it is still too early to assess the economic impact of the Iran war. This cautious stance reflects the Federal Reserve's consistent approach in the face of geopolitical uncertainties, closely monitoring developments while avoiding hasty policy responses in the absence of sufficient information