Iran's control over the Strait of Hormuz in February 2026, following a joint military attack by the United States and Israel on this country, has resulted in significant geopolitical developments in West Asia. These developments have gone beyond regional borders and directly impacted the global economy, particularly the United States. In this context, there are two intertwined key issues: Iran's control over the Strait of Hormuz and the increasing pressure on the Federal Reserve of the United States to resume the cycle of interest rate hikes.
Iran's Control over the Strait of Hormuz and Its Consequences
The Strait of Hormuz is recognized as one of the most vital energy chokepoints in the world, with approximately 20 percent of the world's oil and liquefied natural gas passing through this waterway. Iran's control over this passage has elevated its geopolitical position from a regional power to a decisive player in global energy equations. This control is not only considered a military advantage but also serves as a tool for strategic governance. By leveraging control over shipping arrangements and maritime service costs, Iran sets the rules of the game in one of the most important arteries of the global economy.
This situation brings three key consequences: first, deterrence against external pressures because any threat against Iran faces the risk of disrupting the global energy market. Second, an increase in Iran's bargaining power in regional and international negotiations. Third, the consolidation of Iran's role as a stabilizing power in the Persian Gulf, which was previously monopolized by the United States.
The Federal Reserve and Interest Rate Hikes
Uncertainty in the Strait of Hormuz and rising global energy prices have compelled the Federal Reserve to implement its first interest rate hike since July 2023 in September 2026. The Federal Reserve Chair described this increase as "retrieving part of the easing policy" and warned that there are still many goods and services whose prices are growing at an annual rate of over 3 percent. New forecasts indicate that the consumer price index will average 3.7 percent in 2026, and overall inflation will only return to the 2 percent target by 2029.
Changes in market expectations act as a reinforcing mechanism. The more the market believes in an interest rate increase, the faster the cost of borrowing for the government and businesses rises, intensifying inflationary pressure. This clearly indicates serious challenges for the Federal Reserve and the U.S. economy.
The interest payment to GDP ratio in the U.S. has approached 5 percent, placing the country among the most vulnerable economies in the world. The combination of these three factors creates a vicious cycle: Iran's control over the Strait of Hormuz keeps energy prices high, rising energy prices bolster inflation, and ultimately, the Federal Reserve is forced to raise interest rates, which multiplies the cost of debt servicing.
As a result, this situation has become a nightmare for the federal government and the White House. The government can neither retreat from the Strait of Hormuz nor contain inflation without a recession. These challenges clearly illustrate the geopolitical weakness and blockage of monetary policy in the United States.
