Expert: Rising oil prices may undermine expectations for easing US inflation, posing challenges for the Federal Reserve

Golden Ten Data, March 29 – It has been nearly a month since the outbreak of the conflict between the US, Israel, and Iran. Shipping through the Strait of Hormuz continues to be disrupted, disturbing the global energy supply system and causing international oil prices to surge. Wan Zhe, economics professor at Beijing Normal University, stated that first and foremost, global inflation is facing a comprehensive rebound, as the increase in oil prices will transmit throughout the whole industrial chain. The cost surges will span entire industries such as energy, food, transportation, and chemicals, placing even more severe pressure on economies that are highly dependent on energy imports, such as Europe, Japan, and India. The US is a net energy exporter; however, inflation rigidity could become fully entrenched, leaving the Federal Reserve in a policy dilemma. At present, the average US gasoline price has soared by over 30% in just three weeks. High oil prices have directly reversed the previous trend of receding inflation and thoroughly altered the market’s expectation of rate cuts. Prolonged high interest rates will directly suppress the US real estate market, corporate financing, and stock market valuations. This is especially significant given that this year is a US midterm election year, and gasoline prices are among the most sensitive livelihood indicators for American voters. For global economic growth, a slowdown is on the horizon—high oil prices directly erode residents’ disposable income, squeeze out non-energy consumption, and raise production costs for companies.