Inflation rises to a three-year high! The vice chairman of the Federal Reserve hinted that there will be no change in June, and the new leader, Powell, faces an ultimate "pressure test" in his debut.

Philip Jefferson, Vice President of the Federal Reserve, said that as the effects of tariffs and rising energy costs gradually fade, he expects inflation to cool later this year. However, he warned that the risks of inflation still lean towards the upside. According to the text of his speech to be delivered at a meeting hosted by the Bank of Japan in Tokyo on Thursday morning, Jefferson said he is closely monitoring whether the rise in energy costs due to the Iran war is dragging on consumer spending. He also warned that he continues to see signs of weakness in the labor market. Jefferson reiterated his view that the central bank's current policy stance is fully capable of responding to any developments. At the meeting last month, Federal Reserve officials kept the benchmark interest rate unchanged in the range of 3.5% to 3.75%. "I believe that this policy stance enables us to respond to economic developments based on future data, evolving prospects, and a balance of risks," Jefferson said. "I have not made a prediction for the next meeting and look forward to discussing with my colleagues the policies needed to achieve our dual mandate goals." The Federal Reserve's meeting on June 16-17 will be the first meeting chaired by the new chairman, Kevin Wash. The new head of the Federal Reserve faces the ultimate "stress test" From June 16 to 17, the new chairman of the Federal Reserve, Kevin Wash, will preside over his first Federal Open Market Committee (FOMC) interest rate meeting during his tenure. Against the complex background of inflation rising to a three-year high, escalating internal divisions within the FOMC, and continued pressure from the White House to cut interest rates, this meeting will not only test Wash's leadership for the first time, but also potentially become a key turning point in determining the future direction of the Federal Reserve's policy for the next few years. Most Wall Street analysts point out that Wash's first interest rate meeting will directly confront three core challenges intertwined with "geopolitical inflation, tariff shocks, and economic weakening." Revival of oil prices due to Iran's war rekindles the threat of supply-side inflation Analysts generally believe that the most difficult systemic risks currently come from the Middle East. With the Iran war entering its fourth month, the Strait of Hormuz, a global energy chokepoint, is facing a double blockade from Tehran and Washington. Although the market hopes for a short-term ceasefire, data from the trading platform Kalshi predicts that traders are skeptical of a reconciliation agreement between the two countries, and Brent crude oil has soared to a high of $96 per barrel. Analyst views suggest that this rise in energy costs caused by war is typical of vicious supply-side inflation. The Fed's traditional tightening measures are powerless in the face of such a supply-side shock. If Wash chooses to ignore the rise in oil prices, inflation expectations may spiral out of control and transmit back to various industries; but if he chooses to raise interest rates to counteract oil prices, it will be tantamount to pouring water into a pond, unable to increase oil supply but instead further harm the real economy. Tariffs and trade barriers raise walls, and the difficulty of determining hawkish and dovish policies In addition to the energy crisis, the transmission effects of tariff policies are also a hidden bomb that Wash must face. In his speech, Jefferson mentioned that the "fade of tariff impact takes time," indirectly confirming that current trade policies are continuing to raise import costs and supply chain pressures for American companies. Analyst views suggest that tariffs have dual negative effects of "raising prices" and "suppressing economic vitality." On one hand, they add fuel to inflation, forcing the Fed to maintain a "hawkish" stance on interest rates at the current high of 3.5% to 3.75%, or even to signal a rate hike; on the other hand, the harm of tariffs to international trade worries economists about recession. How to find a balance in this man-made inflation factor created by policy is a great test of Wash's political wisdom and macroeconomic bargaining power. Labor market weakness, the imbalance of the "dual mandate" under stagflation shadows The Federal Reserve's core mission is to maintain the dual balance of "price stability" and "full employment." However, current economic data are showing signs of what central banks fear most, "stagflation." Jefferson clearly pointed out, "We continue to see signs of weakness in the labor market," and high energy costs are indeed dragging on consumption. Analyst views suggest that the side effects of high interest rates are beginning to show, and the U.S. job market is losing resilience. If Wash chooses to continue raising interest rates (or maintaining high rates over the long term) in order to absolutel