Fed Governor Waller changes rate-cut stance due to Iran war — Hormuz closure makes inflation primary concern

US Federal Reserve Governor Christopher Waller said on Day 21 (March 20) that the Iran war and prolonged closure of the Strait of Hormuz had caused him to reverse his stance on the pace of interest rate cuts. Waller, who had since 2025 favored interest rate cuts prioritizing labor market health, told CNBC: 'Since that time the Strait of Hormuz was closed, this is looking like it's going to be a much more protracted conflict, and oil prices are going to stay high for a longer time. So that suggested inflation was more of a concern than I was putting it.' Waller backed the Federal Open Market Committee's decision earlier this week to hold interest rates steady. While flagging inflation as the primary concern, he said he is not currently in favor of rate hikes — positioning the Fed in a 'hold and watch' posture as the war continues. The signal is significant: Waller has been one of the more rate-cut-friendly Fed governors. His pivot toward inflation concern due explicitly to the Hormuz closure and 'protracted conflict' framing reflects the Fed's acknowledgment that the Iran war is now a primary macroeconomic variable — not a temporary shock. Combined with zero crude tanker transits through Hormuz in the past 24 hours and Brent crude at $145/bbl, the Fed's inflation-first posture signals US consumers will face sustained energy-driven price pressure for as long as the war continues.