Federal Reserve Bank of New York President John Williams discusses the market implications of the Iran War, the inflation outlook and more on 'The Claman Countdown.'
The president of the Federal Reserve Bank of New York, John Williams, warned that the consequences of the war with Iran on energy prices could spread to many sectors of the economy.
FOX Business host Liz Claman noted during an interview with Williams Thursday on “The Claman Countdown” that gasoline is used more than transportation, which includes manufacturing clothing, asphalt and packaging.
“There is a pass-through of gas prices in many of the things we buy, including airfare… As fuel costs are high, the cost of air travel will go up,” said William.
“It will spread. It usually takes us to other goods and services. That usually takes months or maybe a year to have a full effect.”
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Domestic gasoline prices have risen since President Donald Trump launched a war on Iran on Feb. 28, 2026. (Al Drago/Bloomberg via Getty Images/Getty Images)
Williams' comments come as oil markets continue to rally amid unrest in Iran and the closure of the Strait of Hormuz, a critical global oil hub through which about 20 percent of the world's oil passes each year.
The national average for a regular gallon of gas is more than $4, up more than $1 since the war began, according to AAA.
The Fed president has spoken out about rising fuel prices, saying it is putting a strain on the already inflation-strained household budget.
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“The high prices of electricity interfere with inflation, it also affects the income available to families,” he said. “Therefore, it attacks both inflation, but also reaches demand in the economy.”
Williams added that the NY Federal Reserve is well positioned for potential risks.
The Iranian flag is in the rubble and debris in Tehran, Iran. (Atta Kenare/AFP/Getty Images)
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“I think that monetary policy, and the actions that we took last year and where we are today, are actually in a good position to keep those risks balanced, and that's what we need to do,” he told FOX Business.
However, President Donald Trump's war on Iran has not been the risk the bank expected, highlighting the limits of monetary policy in responding to sudden political shocks.
“We will not be able to control everything with the change in fuel prices, but what we can do is to try to ensure that the monetary policy is put in place so that the risks that we achieve in our two goals are equal,” said Williams.
Federal Reserve Bank of New York President John Williams discusses the Fed's view of private credit on 'The Claman Countdown.'
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Williams went on to discuss his decision-making process to cut or raise interest rates, emphasizing the importance of an anticipatory approach.
“We have to look forward,” he emphasized. “We have to look at where the economy can be in the next year or two, because monetary policy actions do not fully affect the economy at least for the whole year.”
