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Why the Fed Can't Ignore the Strait of Hormuz Anymore
Season 2
Episode 83
Published 1 week, 4 days ago
Description
Lucas and Luna dig into how the fragile shipping recovery in the Strait of Hormuz is complicating the Fed's inflation outlook. With core PCE at 3.4 percent and breakeven inflation rising to 2.22 percent, the hosts examine why energy supply risks — not just demand-side data — are forcing the FOMC to recalibrate its forecasts. They walk through the mechanics of how a sustained disruption in the Strait could push headline inflation above the Fed's comfort zone, and why the central bank has limited tools to respond to a supply-driven price shock. The conversation touches on the UN's paused evacuation plan, the U.S.-Iran deal's fragile confidence, and what all this means for the rate path through the second half of 2026.