In a post on X, Ghalibaf questioned whether the US Federal Reserve could reopen the Strait of Hormuz or increase oil production simply by raising interest rates. He suggested that changes in borrowing costs would not address the supply-side shock caused by disruptions at strategic energy chokepoints, particularly the Strait of Hormuz and the Bab el-Mandeb.
Ghalibaf argued that inflation expectations in the United States were being affected by what he described as the closure of key energy routes rather than by interest rates alone. He said the associated “Strait of Hormuz risk” was a factor determining interest rates and claimed that control over that risk was currently in Iran’s hands.
The parliament speaker’s comments challenged the conventional use of monetary policy to anchor inflation expectations. He argued that relying solely on demand-side tools such as interest rates was no longer sufficient under current conditions and that geopolitical factors could have a stronger influence on economic indicators such as inflation.
Under normal conditions, central banks seek to anchor inflation expectations around an inflation target or a credible long-term inflation rate, generally using interest-rate adjustments in response to inflation and economic activity.
Ghalibaf argued, however, that the current situation required financial markets and policymakers to incorporate additional variables, including the status of the Strait of Hormuz and Bab el-Mandeb, into their calculations. He suggested that, in his view, US inflation expectations would remain difficult to anchor as long as the geopolitical risks surrounding these waterways persisted.
Ghalibaf referenced a modified version of the Taylor Rule, adding variables related to the Strait of Hormuz and what he termed the associated risk premium. He said the purpose was to examine whether an interest-rate increase could reduce such risks or increase oil supply.
MNA
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