Halibaf: Inflation expectations in the US depend on the Strait of Hormuz and Bab al-Mandab

Halibaf: Inflation expectations in the US depend on the Strait of Hormuz and Bab al-Mandab

🔹 Let's see if the Federal Reserve can open the Strait of Hormuz or produce another barrel of oil by raising interest rates?!

By raising and lowering the interest rate, it is not possible to manage (anchor) inflation expectations in America, because these expectations are affected by the shock on the supply side caused by the blocking of the energy bottlenecks, i.e. the Strait of Hormuz and Bab al-Mandab, and are not related to the interest rate. It is the "Strait of Hormuz risk" that determines the rate, and the control of this risk is now in the hands of Iran.

Glibaf's emphasis in this post is on the concept that today the era of managing inflation and inflationary expectations by using only demand-side tools (interest rates) is over and geopolitics is the one that has the upper hand in influencing economic indicators such as inflation.