Higher Oil Prices Will Keep Inflation Near 3% Through Year-End, Fed Official Says

Core inflation is expected to end the year near 3%, according to St. Louis Federal Reserve President Alberto Musalem. This projection, he said, reflects the ongoing inflationary pressure from higher oil prices, which have climbed from $70 to $95 a barrel since the Middle East conflict escalated. The rise in energy costs has already increased fuel, transport, and shipping expenses, with ripple effects across supply chains. Musalem said these pressures are likely to keep U.S. inflation above the Fed’s 2% target through the end of the year. As a result, investors are increasingly betting the Federal Reserve will maintain its current pause on interest rate cuts as it continues to monitor inflation developments.