Svmuureports that the Boston Federal Reserve released a new study on Thursday stating that fundamental changes in the U.S. energy structure have completely altered the transmission path of oil price shocks to the domestic economy and reshaped the logic of the Federal Reserve's monetary policy. Currently, the Fed's mainstream inclination is to hold steady in the short term, watching for the subsequent impacts of the conflict. However, officials generally worry that a prolonged conflict could solidify high inflation, and some voices have already suggested the possibility of raising interest rates within the year. The Boston Fed's research provides support for this stance, arguing that even if rates are raised this time, the optimized economic structure would prevent the severe employment downside pressure seen in the past.
However, Morgan Stanley holds a distinctly different view, believing the current oil price increase is a short-term supply disruption and will not become the core driver for a Fed rate hike. Morgan Stanley predicts that inflation will gradually warm up in the second half of the year, the job market will experience volatility, and the Fed is likely to keep interest rates unchanged throughout the year, with rate cuts potentially beginning in 2027. (Jin Shi)