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Why the Fed Is Watching the Iran War Energy Spike
Season 1
Episode 23
Published 1 month, 1 week ago
Description
Oil prices have surged over 20% since the Iran conflict escalated, and the Fed's preferred inflation gauge just hit 3.3%. Lucas and Luna dig into why the central bank can't ignore energy-driven inflation the way it could in 2022. They examine how the current spike differs from the Ukraine shock—tighter labor markets, less headroom on rates, and a Fed that's already stuck at 3.64%. They also unpack the 'double scar' effect: consumers still smarting from the 2021-2023 inflation wave now face another price shock. With the ten-year breakeven rate at just 2.38%, bond markets seem oddly calm. Is the Fed trapped between fighting inflation and avoiding a recession? This episode gets into the numbers and the tough choices ahead.