Federal Reserve officials continued on Friday to signal the U.S. central bank may need to raise interest rates in the future if the war in the Middle East leads to a persistent increase in already-high inflation. The potential shift in the monetary policy outlook has even been embraced by Fed Vice Chair for Supervision Michelle Bowman, one of the central bank's most dovish policymakers. Bowman told a conference in Iceland on Friday that the war and its resulting energy shock could change her view on the outlook for rates.
"It still seems early to assess the size and persistence of the economic effects from the Iran conflict," she said, adding, however, that "should disruptions persist well into the second half of the year, we could start to see broader effects on inflation."
