Fed is watching energy price spikes, but Chair Powell says bank is limited in what it can do - AP News

Federal Reserve Chair Jerome Powell acknowledged the central bank is monitoring energy price spikes but said the Fed has limited tools to address them. Energy price volatility can feed into broader inflation pressures, which is typically within the Fed's policy domain, but supply-driven shocks like oil price surges fall largely outside monetary policy's reach. Powell's comments reflect the Fed's balancing act between tracking potential inflation risks and recognizing that some price pressures stem from geopolitical or supply-chain factors beyond its control. The Fed's ability to influence energy costs is constrained because interest-rate adjustments primarily affect demand rather than supply constraints that often drive oil and gas prices. The remarks suggest the Fed will continue monitoring the situation but is unlikely to adjust policy solely in response to energy market movements.