Svmuu News New York Fed President John Williams stated in a FOX Business interview that the impact of the Iran war on energy prices could spread to multiple sectors of the economy. Prices for various goods and services, including airfare, will rise due to increased fuel costs, a transmission process that typically takes months or even a year to fully materialize.
Currently, the national average price for regular gasoline in the U.S. has exceeded $4 per gallon, rising by over $1 since the war began on February 28. Williams pointed out that rising energy prices both push up inflation and reduce household disposable income, creating a dual pressure on economic demand.
Williams stated that the Federal Reserve's current monetary policy is in a good position to balance related risks, but the Iran war represents an unforeseen sudden geopolitical shock, and monetary policy has limitations in responding to oil price fluctuations. He emphasized that decisions need to be forward-looking, as the full impact of monetary policy on the economy takes at least a year.