The Feds' fight against inflation could turn into a 'forever war'.
Wholesale inflation hit a four-year high of 6.5% in October, according to Labor Bureau data released this week. It's been nearly six years since the Fed met its own 2 percent inflation target, and with forecasters not expecting it to do so until at least 2029, the problem could turn into a fiscal quagmire the length of Operation Iraqi Freedom, Fortune says.
"Despite the obvious differences with the bloody Iraq War, the Fed's inflation fight is also being driven by events in the Middle East, this time in Iran," the paper said, highlighting how the conflict reversed downward inflation trends in early 2026, with rising energy prices meaning 'higher everything' prices and Fed interest rate hikes. Tight supplies of refined energy and higher consumer prices (food, shelter, health care, transportation) in the latest CPI report are "borderline troubling," Chicago Fed President Austin Goolsby told business media this week.
"We've been above 2% for almost six years, and while sometimes we've made progress, lately we're not making progress, and if anything, it's going wrong," he said.
"With the Iranian conflict continuing indefinitely, the Fed may need to adjust its inflation forecast again and be more aggressive on interest rates," Fortune suggested.
The problem is, if it does, raising interest rates will result in more expensive mortgages and loans, higher Treasury yields, and higher borrowing costs for a federal government struggling with a $40.6T+ debt problem. Pushing too hard could trigger a crisis in the housing, stock or bond markets, while printing its way out of debt could collapse the global reserve status of the dollar. Some analysts claim this was Iran's plan all along.
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