Federal Reserve Vice Chair of Supervision Philip Jefferson said Thursday evening that he expects the war in Iran will push up inflation in the near term and that interest rates are "well-positioned" to respond to a range of economic outcomes. Jefferson is closely monitoring the situation in both the Middle East and global energy markets, but noted it’s still too early to say how the economy will be impacted. He stressed that the effects of the war in the Middle East will largely depend on how long energy prices remain elevated. He noted that a short period of disruption is unlikely to have a noticeable effect on the economy beyond a quarter or two but that sustained higher oil prices could have material implications. Jefferson said the increase in oil prices to date should have relatively modest effects on inflation, though consumers are seeing higher gas prices at the pump now. [finance.yahoo.com/.../feds-jefferson-sees-high...](finance.yahoo.com/.../feds-jefferson-sees-high...)

The war in Iran has sent energy prices soaring, stoking inflation fears that could undercut President Donald Trump’s hope of Fed rate cuts this year. The Atlanta Federal Reserve Bank’s Market Probability Tracker now positions the odds of a rate hike as more likely than the odds of a rate cut within the next three months. The tracker—a tool that estimates the market-implied probabilities of various ranges for the three-month average Fed funds rate—reveals the probability of a rate cut within a three-month window has fallen from a high of about 60% in early February, down to about a 16% chance as of Tuesday. The probability of a rate hike, on the other hand, has risen steadily since the start of the month, up to about 15% from single digits, though down slightly from a high of about 25% last week. The war in Iran and resulting global energy crisis has sent jitters throughout the economy. Inflation fears have gripped global markets, causing Treasury yields to jump Thursday as gold and silver prices plummet. Those fears have even caused some economic analysts and business leaders to invoke the dreaded S-word: stagflation. Read more: [fortune.com/.../federal-reserve-rate-hik...](fortune.com/.../federal-reserve-rate-hik...)

The Fed held rates steady while acknowledging uncertainty from rising oil prices and geopolitical tensions. Markets appear to be shifting toward expectations that rates will stay elevated longer, especially if energy costs continue feeding into inflation. [Fed Holds Rates as Geopolitical Friction Delays Easing](sandmark.com/.../fed-holds-rates-geopolit...) The interesting part is how much of the current outlook is being driven by external shocks rather than domestic demand. Higher energy prices act like a tax on consumption, which can slow growth while still pushing inflation higher. That puts central banks in a difficult position, as tightening policy further risks weakening the economy, but easing too early could reinforce inflation pressures. The current stance seems less about confidence and more about waiting for clearer signals before committing to a direction.