Iran Uses Taylor Equation to Troll Trump Over Interest Rates

The war between the US and Iran has taken an unexpected turn as tensions escalate. Iranian Parliament Speaker Mohammad Bagher Ghalibaf posted a version of the Taylor equation, a formula used by central banks to determine interest rates, on social media.

In his message, Ghalibaf referenced the Strait of Hormuz, which Iran has effectively blocked to global navigation, and questioned whether a 25 basis point hike in interest rates could open it. He also emphasized that 'it is the risk premium of SOH [Strait of Hormuz], and we define it.'

The post came after the Federal Reserve raised its key interest rate by 25 basis points, which was seen as a response to the war's impact on global energy markets and inflation.

Analysts argue that while Iran's actions have influenced some of the forces feeding into US monetary policy, particularly through the conflict's impact on supply and crude oil prices, it does not determine US interest rates. The Federal Reserve reacts to a broader set of economic conditions, including massive investments tied to artificial intelligence.