Although I still believe that the Federal Reserve will not raise interest rates in September, I have a different view from those who say, "The current inflation is not caused by demand, even if you raise it a hundred times, oil prices won't decrease."

Firstly, a significant reason for the current inflation rise is the oil price increase due to the blockade of Hormuz. Raising interest rates will not directly lower oil prices, but the impact of interest rate hikes can suppress public demand for refined oil. By reducing demand, we can lower oil prices, thus reducing inflation, which is where monetary policy can play a role.

After interest rates are raised, the costs of auto loans, mortgages, credit cards, and corporate financing will increase. Residents will cut back on consumption, and companies will also reduce investment and expansion. After economic activity cools down, the demand for oil from driving, transportation, aviation, and industrial production will decline.

Therefore, even if the Hormuz Strait has not fully recovered and crude oil supply remains tight, after the demand decreases, the supply-demand gap will also narrow, and the potential for oil prices to continue rising will naturally be suppressed.

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