Rising oil prices "no need to panic"? JP Morgan directly confronts the Federal Reserve: Don't try to fool the market, inflation will eventually impact employment.

Bob Michele, global head of fixed income at J.P. Morgan Asset Management, stated that in the face of rising oil prices and escalating geopolitical risks due to the conflict in Iran, the Federal Reserve is sending a signal to the market to "not panic." Following the announcement on Wednesday by the Federal Reserve to maintain interest rates, Michele said in an interview that the U.S. economy is experiencing a "minor short-term inflation impact," which could actually accelerate economic growth. He admitted that he was "shocked" by the Federal Reserve's decision. "They are trying to reassure the market not to worry," Michele said bluntly, but then added that he himself was not buying it: "Ultimately, inflation will be substantially affected, and the labor market will also not be spared." Former Vice Chairman of the Federal Reserve and current Global Economic Advisor at The Pacific Investment Management Company (PIMCO), Richard Clarida, believes that the Federal Reserve needs a new term to replace "transitory" to describe the current inflation pressure. He pointed out that the trend of crude oil futures shows that the rise in prices will gradually dissipate over time. "In short, including the Federal Reserve, no one knows how long high inflation will continue." Clarida described the overall policy stance of the Federal Reserve as "dovish" and "constructive," but also acknowledged that geopolitical risks pose a significant threat to the inflation outlook. He also mentioned that the widespread use of artificial intelligence (AI) in the economy is also one of the factors considered in Federal Reserve policy. Michele also pointed out that the question of whether Federal Reserve Chairman Powell will remain in office after his term ends in May is still a focus for the market. "Personally, I think he will stay on until after the midterm elections," Michele said. Even if Powell no longer serves as chairman at that time, "his continued tenure can bring stability to the market." Powell's tenure is becoming a litmus test for the independence of the Federal Reserve. Previously, President Trump had urged the Justice Department to investigate the Federal Reserve's headquarters renovation project and Powell's related statements. In a press conference on Wednesday, when asked about his future plans, Powell stated that he has not yet decided whether to serve as a member of the Federal Reserve Board until January 2028.