The speaker of Iran’s parliament is trolling the US on social media about the Fed’s inability to keep a lid on one of the biggest inputs for inflation: oil prices.
Mohammad Bagher Ghalibaf, Iran’s Speaker of Parliament, spent the summer on social media taunting President Donald Trump over the Strait of Hormuz, which has remained partially closed throughout the war despite the administration’s periodic claims that energy flows have resumed.
Just hours before the US Federal Reserve Chair Kevin Warsh announced an interest rate hike for the first time since 2023, Ghalibaf posted a joke to X only a “Bloomberg Terminal Bro” could understand.
The post defined the “Straits Taylor Rule,” a satirical rewriting of the rule central banks use to set monetary policy and fight inflation. The Taylor rule, described by economist John B. Taylor in 1993, helps calculate what a central bank’s interest rate should be to keep inflation at an optimal level.
Ghalibaf’s rewriting of the rule adds two main factors: SOH and BEM. These reflect the impact of full or partial blockades by Iran and its Houthi allies in the Strait of Hormuz and the Strait of Bab el-Mandab.
Disruptions to the key waterways have sent oil surging. Diesel, the backbone of global logistics, has spiked to all-time highs in the US, threatening further inflation ahead.
That very threat of higher prices is what led to the Fed’s decision to cut rates this week, with Warsh defying the wishes of President Trump, who appointed him to his position.
Ghalbaf writes that we will “see if a hike could open SOH or produce a single barrel,” adding that “you can’t 25bp a chokepoint,” aka raise rates by 0.25% and expect it to relieve the supply problems that are keeping oil prices high.
He went on to taunt that the cost of borrowing is being set not just via the Fed’s policy rate rate, but by the blockade.
“It’s SOH risk premium, and We set it,” he wrote. Ghalibaf’s underlying message of the post is that Iran, not the US’s Federal Reserve, is now in control of oil prices and, as a result, inflation.
The post has attracted thousands of responses and reposts on X, including one from Arnaud Bertrand, a French entrepreneur who founded and sold a company to TripAdvisor.
“You can say what you want about Iran but they’re definitely pretty unique in their communication: never seen a country threaten another with a math equation before,” Bertrand said.
And while interest rates may yet be able to tamp down inflation, even Warsh was clear on Wednesday that oil prices are out of his hands.
“We cannot affect any individual price, whether it be oil prices, whether it be foodstuffs at the grocery store,” Warsh said, answering a question about the Strait of Hormuz and energy prices. “But what we can do, and will do, is ensure that any change in relative prices don’t broaden out. Don’t have second and third order effects in the economy.”