Federal Reserve Chair Jerome Powell said the United States central bank can look past the recent surge in energy prices caused by escalating conflict in the Middle East, noting that such supply shocks are typically short-lived. Speaking at an event at Harvard University, he said energy price spikes tend to fade quickly, while monetary policy actions take longer to affect the broader economy.

Tensions following late February strikes involving the United States, Israel and Iran have disrupted traffic through the Strait of Hormuz, a vital route for global oil and liquefied natural gas shipments. The disruption has pushed up global oil prices and increased gasoline costs in the United States, raising concerns about renewed inflationary pressure. Powell said current policy is well positioned to allow officials to wait and assess how the situation develops, adding that longer-term inflation expectations remain stable.

He cautioned, however, that persistent supply-driven price increases could shift inflation expectations and require a response. Powell also highlighted the central bank’s challenge in balancing price stability with support for employment, acknowledged improvements in financial system resilience since the 2008 crisis, and stressed the importance of maintaining the institution’s political independence as his term nears its end.