Janet Yellen warns of inflation risk, Fed rate cut in danger of being canceled?

Jakarta, Pintu News – Geopolitical tensions between the United States and Iran are heating up, sparking renewed concerns in global financial markets. Former US Treasury Secretary Janet Yellen gave a stern warning that the conflict could push inflation higher and slow economic growth.

This situation makes the chances of an interest rate cut by the Federal Reserve (Fed) even smaller. Amid surging oil prices and global uncertainty, market players are now waiting for the next move from the US central bank.

Inflation Threat Looms, Janet Yellen Highlights Fed Policy

Janet Yellen emphasized that the conflict between the United States and Iran has the potential to exacerbate inflationary pressures in the United States. According to her, the increasingly heated geopolitical situation could hamper economic growth while pushing prices up, especially in the energy sector.

Yellen stated that the Fed is now increasingly cautious in making decisions regarding interest rate cuts. She assessed that the risk of higher inflation makes the central bank tend to delay monetary easing measures.

Yellen’s statement contradicts the predictions of some crypto market participants, such as BitMEX founder Arthur Hayes, who predicted that interest rate cuts would be more likely if the conflict continues.

However, Yellen emphasized that the Fed’s top priority at the moment is to maintain price stability and control inflation expectations. With inflation still above the target, the central bank must be more vigilant in making policy.

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Oil Prices Surge, US Inflation Still Above Target

The surge in world oil prices is one of the main factors driving inflation in the United States to remain high. Janet Yellen revealed that inflation is currently at around 3%, well above the Fed’s target of 2%.

Conflicts in the Middle East, particularly in the Strait of Hormuz, have caused oil supplies to be disrupted and crude oil prices to spike sharply. If the closure of the Strait of Hormuz lasts longer, oil prices could potentially remain high and exacerbate inflationary pressures in the US.

In addition to geopolitical factors, Yellen also highlighted the impact of tariff policies implemented by former President Donald Trump on the inflation rate. High import tariffs have increased production costs and prices of consumer goods in the domestic market.

This condition further complicates the Fed’s efforts to lower inflation to the desired level. With pressure from various sides, the central bank must consider many factors before making decisions regarding interest rates.

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Market Expectations and the Fed’s Challenge in Controlling Inflation

Janet Yellen highlighted the importance of public perception of the Fed’s commitment to reducing inflation. If the public and market participants begin to doubt the central bank’s seriousness, inflation expectations could rise and become increasingly difficult to control.

This could potentially trigger higher inflation over a longer period of time. Therefore, the Fed must be careful not to give the wrong signals to the market.

On the other hand, weak labor market conditions are also a major consideration for the Fed. Before the US-Iran conflict heated up, the central bank had already shown reluctance to cut interest rates due to concerns about the resilience of the domestic economy.

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Reference

• CoinGape. Fed Rate Cut At Risk? Janet Yellen Flags Inflation Concerns Amid US-Iran War. Accessed on March 4, 2026
• Featured Image: Generated by AI