Goldman Sachs Research discusses the Fed policy trajectory in the light of the Iran war and high oil prices.

"Since the start of the Iran war, market pricing for the fed funds rate has swung sharply, and markets are now pricing a roughly 45% chance that the FOMC will hike in 2026 (vs. 12% before the war). We see hikes as much less likely than this for a few reasons," GS notes

"First, the current supply shock is smaller and narrower than prior shocks that caused inflation problems....Second, the economy’s starting point makes large spillovers to broader inflation unlikely.

Third, the starting point for monetary policy makes hiking less likely...Fourth, the Fed typically does not tighten in response to oil shocks alone," GS adds.