Federal Reserve Chairman Jerome Powell stated on Monday that the central bank's response to the US-Israeli war on Iran will largely depend on how the conflict affects Americans' inflation expectations. During a dialogue hosted by Harvard University, he said: «There are potentially negative risks to the labor market that warrant keeping interest rates low, but there are also risks to inflation, which remains entrenched, that warrant raising them». He added: «It is known that monetary policy works with long and variable lags, so by the time the effects of tightening materialize, the impact of the oil shock will likely have dissipated. People tend to ignore any supply shock».
