Federal Reserve officials signalled potential rate hikes if Middle East tensions drive a prolonged energy shock and keep inflation elevated. Policymakers, including Michelle Bowman, warned inflation risks remain high above target, while markets shift expectations from rate cuts to possible tightening as oil prices and supply disruptions persist.

A growing split is seen among US Federal Reserve officials. Some policymakers warn that interest rates might need to increase again. This comes as inflation shows signs of not…

Bowman said reacting to the inflation surge, driven primarily by energy prices and tariffs, has proven ineffective.