International News 27 August 2026
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Fed's Susan Collins Warns of Potential Rate Hikes if Inflation Persists
The Federal Reserve has signaled the possibility of additional near-term interest rate hikes if incoming economic data fails to demonstrate a sustained decline in inflation. Federal Reserve Bank of Boston President Susan Collins emphasized that price pressures across the United States remain unacceptably high, causing widespread concern among both businesses and households. In a statement published on the Boston Fed's website on Tuesday, Collins noted that under her baseline scenario, the central bank's current policy rate should sufficiently support a gradual disinflationary process. However, she indicated that while higher long-term bond yields and other tightening financial conditions could aid in cooling inflation, the Fed remains prepared to tighten policy further if price stability continues to prove elusive.
Iran and Oman Seal Hormuz Revenue Pact, but Strait Remains Closed Pending US Concessions
Iran and Oman have successfully reached an agreement regarding the division of territorial waters and revenue sharing in the Strait of Hormuz following a month of bilateral negotiations. According to statements made by Islamic Revolutionary Guard Corps (IRGC) spokesperson Hossein Mohebbi to Iranian state media on Wednesday, both nations have established a mutually acceptable framework for managing the strategic maritime route. However, despite this diplomatic alignment between Tehran and Muscat, officials warned that the critical shipping lane will remain closed to international traffic unless the United States agrees to the specific conditions jointly laid out by the two countries. Prior to the outbreak of war in February, the Strait of Hormuz served as a vital artery for global energy markets, facilitating the transit of approximately one-fifth of the world's oil and liquefied natural gas (LNG). Since the conflict erupted, widespread commercial shipping through the chokepoint has essentially ground to a halt as both Iranian and U.S. forces enforce competing blockades. This prolonged closure has severely disrupted international trade and driven up global energy prices, with the resumption of normal transit now hinging entirely on Washington's response to the new demands set by Iran and Oman.
Stubborn US Inflation Persists in July, Complicating Fed Rate Path
U.S. inflation remained stubbornly high in July 2026, signaling that price pressures are proving difficult to tame and potentially complicating the Federal Reserve's upcoming interest rate decisions. According to data released by the Commerce Department's Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) price index rose 3.7% year-over-year, matching June's pace and slightly exceeding economists' forecasts of 3.6%. This leaves the metric above the central bank's 2% target for the 65th consecutive month. On a month-to-month basis, the index climbed 0.2%, rebounding from a 0.1% decline in June. The broader inflationary landscape remains heavily influenced by recent geopolitical turmoil, with the PCE index having previously surged to a three-year high of 4.1% in May. That earlier spike was largely fueled by soaring energy costs after the U.S. and Israel's conflict with Iran erupted in late February, temporarily disrupting roughly a fifth of the global oil supply. While the war remains unresolved six months later, the intensity of the hostilities has somewhat de-escalated, allowing oil prices and their associated inflationary impacts to cool from their mid-spring peaks.