Menzie Chinn, an economics professor at the University of Wisconsin-Madison, said it’s a pretty safe bet that the Fed is keeping an eye on the war in Iran and its effect on energy prices.
“I think they will be eager to make sure that they show commitment to not let inflation get out of hand,” he said.
Chinn said the Fed usually focuses on core inflation, which strips out energy prices since they can jump around from month to month. But he said the Fed will also consider scenarios where the conflict drags on, keeping energy prices high for a while.
“And if it’s sustained, then that’s going to feed into core prices, eventually,” Chinn said.