Fed Chair Kevin Warsh Just Threw Cold Water on Investors Who Thought the Worst of Inflation Was Over
Yahoo Finance ·
Throughout history, the stock market has made a habit of climbing the proverbial wall of worry -- and 2026 has, thus far, been no exception. Despite the Iran war approaching its fifth month, the Dow Jones Industrial Average ( ^DJI -0.01% ) , S&P 500 ( ^GSPC -0.14% ) , and Nasdaq Composite ( ^IXIC -0.57% ) have all exploded to record highs this year. But bull markets aren't indefinite, and above-average inflation is a formidable foe. While a favorable inflation report for June has some investors celebrating as if the worst of the Iran-war-driven inflation is over, Fed Chair Kevin Warsh just stamped out any idea of putting this concern in the rearview mirror . Fed Chair Kevin Warsh has promised to deliver price stability. Image source: Official White House Photo by Daniel Torok. The primary inflation driver of the Iran war has been Iran's closure of the Strait of Hormuz. Choking off the flow of maritime traffic has essentially halted the movement of a fifth of the world's liquid petroleum demand and sent fuel prices soaring . Within weeks, gas prices rose at the fastest pace in more than 30 years, resulting in trailing 12-month (TTM) inflation reaching 4.2% in May (a three-year high).
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Federal Reserve Chair candidate Kevin Warsh warned against expectations of easing inflation in June, signaling that the war on inflation is not over. The blockade of the Strait of Hormuz due to the Iran war cut off one-fifth of global oil supply, leading to surging oil prices and a 12-month cumulative inflation rate of 4.2%. Although the stock market hit record highs, ongoing inflationary pressures require a cautious approach from investors.
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- Stock Market — The upward momentum of major indices like the S&P 500 and Nasdaq may slow down due to the potential maintenance of the Fed's tightening stance and persistent inflation pressures.
- Crude Oil — Global oil supply disruptions and a continuous surge in oil prices are occurring due to the blockade of the Strait of Hormuz caused by the Iran war.
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