New York Fed President warns that oil price increases triggered by Iran war could impact the overall economy

CoinWorld News: In a FOX Business interview, John Williams, chairman of the Federal Reserve Bank of New York, said that the impact of a war in Iran on energy prices could spread to multiple areas of the economy; the prices of various goods and services, including airfare, may rise as fuel costs increase. This transmission process typically takes several months, or even a year, to fully show itself.

As of now, the national average price of regular gasoline in the United States has already surpassed $4 per gallon, having risen by more than $1 since the outbreak of the war. Williams noted that higher energy prices both drive inflation and weaken household disposable income, creating dual pressure on economic demand.

Williams said the Federal Reserve’s current monetary policy is in a good position to balance the related risks, but a war in Iran is an unforeseeable, sudden geopolitical shock, and monetary policy has limitations in responding to oil price changes. He emphasized that decisions need to be forward-looking because the full impact of monetary policy on the economy takes at least a year.