Federal Reserve officials have expressed concerns over rekindling inflation risks in the U.S. as ongoing conflicts in Iran drive up oil prices and exacerbate supply chain pressures. St. Louis Fed President Mester highlighted that policy risks are now skewed towards higher inflation, suggesting that interest rates may need to remain elevated and could be increased further if necessary. Rising costs for industrial inputs like aluminum and diesel are contributing to broader inflationary pressures. Chicago Fed President Goolsbee cautioned that sustained high oil prices could disrupt global supply chains, potentially mirroring the inflationary patterns observed during the pandemic. Although the U.S. is not currently experiencing stagflation, Goolsbee warned of increasing tensions if the situation persists. The national average gasoline price has surpassed $4.50 per gallon, and the New York Fed’s Global Supply Chain Pressure Index is at its highest since July 2022. With U.S. inflation rising to 3.5% year-over-year in March, the market anticipates limited scope for interest rate cuts by the Federal Reserve in the coming year.