Svmuu News Federal Reserve Officials are set to meet this week, with their policy outlook already disrupted by the war in Iran, which has brought one-fifth of global oil supplies to a standstill. Officials will discuss whether the conflict is more likely to derail economic growth, trigger more persistent inflation, or create a complex scenario where economic slowdown and rising prices coexist. Given that supply shocks during the pandemic caused Federal Reserve to miss its 2% inflation target for five consecutive years, policymakers are more likely to adopt a cautious stance this week—or even send a directly hawkish signal.The current inflation rate remains about 1 percentage point above the target and is expected to rise further, particularly as oil prices—which have surged nearly 50% in two weeks—remain at elevated levels.Officials must also weigh whether this emerging economic shock—which is expected not only to drive up prices but also to tighten financial conditions, depress asset prices, and increase uncertainty—could become the trigger that breaks the economy’s resilience. Markets expect the Federal Reserve to keep interest rates unchanged at this week’s policy meeting. Data since the last meeting shows little change in the underlying outlook, and the Federal Reserve is in the midst of a leadership transition—Kevin Warsh, nominated by Donald Trump, is expected to eventually secure Senate confirmation and take over as head of the Federal Reserve from current Chair Jerome Powell after mid-May.Nevertheless, Federal Reserve officials will still present new economic forecasts, striving to determine whether future conditions will require a firm fight against inflation by maintaining tight monetary policy or offsetting the impact of an economic slowdown through interest rate cuts. (Jin Shi)