On April 18th, Federal Reserve Governor Waller expressed caution about whether a rate cut is needed in the short term due to the energy shock caused by the Iran war, and warned that the conflict may have a sustained impact on inflation. Waller outlined two main scenarios in his speech. In the first scenario, if the Strait of Hormuz is reopened and trade flows return to normal, officials will be able to ignore the soaring energy prices and shift their focus to the weak job market later this year. He said that if this situation occurs, "I believe there is a prospect that potential inflation will continue to fall back towards the 2% target, which will make me cautious about current interest rate cuts and more inclined to support the labor market through interest rate cuts later this year when the outlook is more stable." However, he warned that oil prices and the overall market underestimate the risk of prolonged conflict. In terms of inflation, the risk lies in the longer the conflict lasts and the longer energy prices remain high, the greater the possibility that these high prices will permeate into other prices, as companies will take into account high energy input costs when pricing. He said that if this situation occurs against the backdrop of a weak job market, it will limit policy response space. In this situation, he will weigh the risks between higher inflation and weaker labor markets. "If the inflation risk exceeds the labor market risk, it may mean maintaining policy rates within the current target range