Hassett Predicts Sharp Inflation Drop Upon Strait of Hormuz Reopening

Key Facts

Amid shifting expectations for monetary policy, former economic advisor Kevin Hassett expects inflation to drop sharply once the Strait of Hormuz reopens and energy prices decline. Hassett stated that inflation is expected to fall by the end of the year, driven by declining energy costs and strong economic momentum. According to the reports, the reopening of the Strait is seen as a primary catalyst for lowering energy expenses, which would subsequently reduce overall inflationary pressures.

These projections arrive as market data shows significant volatility in the energy sector, with the EIA Weekly Petroleum Report showing a drop of -7.864 million barrels on May 20, 2026, far exceeding the forecast of -2.9 million. In a broader context, the UK annual inflation rate cooled to 2.8% in May per market data, coming in lower than the 3% forecast. These figures highlight a global trend of moderating price pressures as investors look toward the stabilization of supply chains through critical maritime corridors.