Iran's Parliament Speaker Links US Inflation to Strait of Hormuz Closure

Iran's Parliament Speaker Mohammad Baqer Qalibaf has linked US inflation to the closure of strategic energy corridors, specifically the Strait of Hormuz and Bab al-Mandab. According to Qalibaf, raising interest rates will not curb inflation expectations because they are driven by a supply-side shock tied to these closures.

In a post on social media platform X ahead of the US Federal Reserve's interest rate announcement, Qalibaf presented a modified version of the Taylor Rule, an economic formula used to guide central bank interest rate decisions. He argued that traditional monetary policy is no longer effective in addressing geopolitical problems and suggested that the 'Strait of Hormuz risk' now determines inflation rates.

Qalibaf's remarks reflect a broader argument that geopolitics holds greater sway over economic indicators, including inflation, than demand-side tools such as interest rates. He claimed control over this risk currently rests with Iran, adding that raising interest rates would not open the Strait of Hormuz or produce additional oil barrels.