ME News reports that on September 16 (UTC+8), Iran’s Speaker of Parliament, Kalibaf, posted: “The Strait of Hormuz Rule: i = r* + π* + 1.5(π−π*) + 0.5(y−y*) + α(SOH−SOH*) + β(BEM−BEM*), where α, β > 0. Let’s see whether raising interest rates can open the SOH (i.e., the Strait of Hormuz) or produce a barrel of oil. You cannot influence a strategic chokepoint with a 25-basis-point rate hike, and r* is not the neutral rate—it is the SOH risk premium, set by us.” (Source: Jin10)
Iranian MP Karoubi Proposes 'Strait Taylor Rule' to Question the Efficacy of Rate Hikes
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Summary
On September 16, Iranian Parliament Speaker Mohammad Bagher Karoubi introduced the "Strait Taylor Rule," challenging the impact of rate hikes on regional stability. He argued that 25-basis-point increases fail to address strategic risks such as those posed by the Strait of Hormuz. Karoubi suggested that the neutral rate 'r*' reflects Iran’s approach to risk management, emphasizing the need to reassess the risk-to-reward ratio in monetary policy.
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