Warsh's Rate Hike Misses Mark on Inflation Cause

The Federal Reserve Chairman's recent decision to increase interest rates by 0.25% to combat inflation has been met with criticism from some economists.

Kevin Warsh, the new Fed chairman, based his decision on the discredited Phillips Curve theory, which states that inflation is fueled by too much economic growth and employment.

However, a more pressing issue driving current inflation rates is the ongoing conflict in the Middle East, particularly with Iran. The price of oil has surged to $107.02 per barrel due to the increased tensions and disruptions to global energy supplies.

This increase in oil prices, rather than 'runaway' GDP growth, was responsible for the 3.4% year-over-year inflation rate in August.