Federal Reserve Chairman Kevin Warsh is staring down a rise in inflation that is driven in large part by something the central bank cannot control: the war with Iran.

In this scenario, where prices are rising because of disruption to the supply chain for a key global commodity, the advice to a central banker would normally be to avoid tightening monetary policy. Instead, the Fed should “look through” the rise in inflation caused by soaring oil and gas prices — that is, ignore it — in light of the fact that it does not otherwise appear the economy is overheating. So the Fed should continue holding interest rates steady, rather than hike them.

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