The Federal Reserve, even in the event of a U.S.-Iran war, prioritizes economic stability... maintains a "wait-and-see" attitude toward rising oil prices.

The U.S. Federal Reserve System takes a cautious view of the economic impact of the war between the U.S. and Iran, maintaining a wait-and-see attitude. Jerome Powell, the Chairman of the Federal Reserve, on the 30th emphasized at Harvard University in Massachusetts that “current monetary policy is sufficiently prepared to handle changes in the situation,” and said it is too soon to make direct judgments about the economy and prices.

In his assessment, Chairman Powell said that inflation expectations have moved beyond short-term fluctuations and remained stable. But he also indicated that, given that the timing of the war’s economic effects is difficult to predict, the Fed will not rush into an absolute shift in direction or into tightening policy. This again underscores the recent decision by the Federal Open Market Committee (FOMC) to keep the benchmark interest rate unchanged.

The Federal Reserve explained that supply-side shocks, such as oil price increases, are often not addressed through monetary policy. Chairman Powell said that such shocks sometimes may fade away on their own rather than continuing to weigh on the economy. Therefore, the Fed decided, for now, not to make major policy adjustments, but to continue monitoring developments.

On the other hand, regarding the bad-risk concerns in the private lending market that have recently raised worries, Chairman Powell said, “We are keeping a close watch.” He assessed that, at present, there are no signs that problems in this area have yet emerged or begun to spread to the banking system or the overall economy.

This development reflects that the Federal Reserve still places economic stability above inflation control. How the Fed’s policy direction will be adjusted in the future, as international conditions and economic indicators change, is worth watching.