The situation in the Middle East affects the direction of the Federal Reserve's monetary policy
According to Jinshi Data, Bank of New York Mellon believes that monetary policy is not suitable for responding to geopolitical shocks, but tensions in the Middle East may make the Federal Reserve more cautious. Saxo Bank pointed out that the Iran-Israel conflict may push up oil prices and inflation, hindering the Federal Reserve's interest rate cuts. ING Bank said that the Federal Reserve may use rising oil prices to resist Trump's calls for interest rate cuts. A former advisor to Powell said that the situation in the Middle East is the "major variable" for the Federal Reserve and could lead to soaring oil prices and an economic recession. IG Group believes that the situation in the Middle East may prompt the Federal Reserve to adopt a more dovish stance. Bank of America pointed out that rising oil prices may lead to stagflation, but current oil prices are still below last year's levels. Citigroup said that if the situation in the Middle East worsens, rising oil prices will exacerbate the Federal Reserve's inflation challenges. The Oxford Economics Institute believes that rising oil prices may prompt the Federal Reserve to cut interest rates sooner than expected.