Iran war is testing how long the Fed can look past higher energy prices

by AUSTIN DENEAN | The National News Desk WASHINGTON (TNND) — Renewed pressure on oil prices and uncertainty about what will come next in the war with Iran are creating challenges for the Federal Reserve and raising questions about how long it can continue looking past an energy shock that has already gone on for months without an adjustment to rates. Central banks typically look through energy shocks instead of responding to them on the assumption that prices will eventually normalize and raising rates would slow an economy already taking a hit from higher oil prices. But it is getting harder for the Fed to look through the shocks from the war with Iran, which has dragged into a seventh month with no clear path to a resolution. Oil prices have dipped some from the highs of over $100 a barrel during the peak of the conflict but are still well above pre-war levels and surpassed $90 after renewed fighting this week . Energy prices aren’t the only thing putting pressure on inflation.

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