US Stock Market: Oil rally and Hormuz threats stir inflation fears, complicating Fed policy path
Why it matters: Higher oil prices could stall Fed easing, raising inflation and squeezing consumer‑ and business‑costs.
- Iran’s Supreme Leader warned the Hormuz lane could stay closed, spiking WTI crude to $95.70 per barrel (Reuters).
- Goldman Sachs lifted its U.S. PCE inflation forecast to 2.9% for December and pushed the next Fed rate‑cut bet from June to September (Reuters).
- Federal Reserve faces a leadership change with Kevin Warsh slated to replace Jerome Powell, a shift markets view as more cut‑friendly but still tied to oil‑driven inflation (Reuters).
- Food and fertilizer markets could feel the squeeze, as Hormuz also ships vital agricultural inputs, potentially raising global food prices (Reuters).
Iran’s threat to shut the Strait of Hormuz sent crude above $95, reviving inflation worries and forcing markets to trim expectations for Fed rate cuts. Goldman Sachs now sees U.S. PCE inflation near 3% by year‑end, while the looming Fed chair transition adds uncertainty to policy direction.
