Iran’s Parliament Speaker Mohammad Bagher Ghalibaf mocked the Federal Reserve’s rate hike on Wednesday, posting a satirical “Straits Taylor Rule,” arguing that Iran controls the main driver of inflation.
‘You Can’t 25bp a Chokepoint’
In the post on X, he said he wrote his own version of the Taylor Rule, the standard economic formula central banks use to set interest rates, adding new terms specifically for the Strait of Hormuz and Bab el-Mandeb.
“Straits Taylor Rule: i = r* + π* + 1.5(π−π*) + 0.5(y−y*) + α(SOH−SOH*) + β(BEM−BEM*), α,β > 0,” he said.
He added that “you can’t 25bp a chokepoint,” arguing that the Fed’s neutral rate doesn’t account for what he says is the real driver of inflation: the risk premium tied to the two shipping corridors.
“It’s SOH risk premium, and we set it,” adding “stay unanchored.”
The Fed Delivered the Hike
The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%-4.00% on Wednesday, marking its first rate increase since 2023.
U.S. producer prices rose 5.4% year-over-year in August, up from 4.8% in July, driven largely by higher energy costs tied to the Iran war.
Oil Prices Remain Elevated
The war in Iran, which started in February, has disrupted global shipping and sent oil prices above $100 a barrel this month.
The Strait of Hormuz typically handles roughly one-fifth of global oil and LNG shipments, according to the International Energy Agency. U.S.
At the time of writing, Brent crude was up 0.22% at $105.84, while WTI futures were down 0.30% at $102.12.
Gasoline and diesel prices have risen at the pump, prompting retailers like Costco Wholesale Corp. (NASDAQ:COST) to raise prices of their private-label motor oil and introduce weekly purchase limits.
U.S. Central Command spokesman Capt. Tim Hawkins said the blockade of the Strait of Hormuz is “highly effective,” telling Al Jazeera on Wednesday that Iran doesn’t control the waterway and that roughly 900 million barrels of oil have passed through since May.
Treasury Secretary Scott Bessent has escalated “Operation Economic Outcast,” a sanctions campaign aimed at cutting off Iran’s remaining financial lifelines.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: MDart10 on Shutterstock.com
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