Stephen Moore told Newsmax on Monday that a peace agreement with Iran could provide significant relief for American consumers by lowering gasoline prices and helping drive inflation back toward the Federal Reserve's target.
Moore, senior economic adviser during President Donald Trump's first term, told Newsmax's "American Agenda" that the resolution of tensions surrounding the Strait of Hormuz removes a major obstacle that had been weighing on the economy.
"It's obviously great news that we have this peace deal with Iran," Moore said.
The Strait of Hormuz, a crucial shipping route for global oil supplies, had faced disruptions that contributed to higher energy costs. Moore said those effects will not disappear immediately because countries must rebuild depleted reserves and restore supply chains.
"It's going to take a while for the price of oil to get back down to say below $3.50 a gallon because there have been supply disruptions that have to be reopened," he said. "A lot of countries have to replenish their reserves because they've been that depleted because of the long situation where the straits were closed."
Still, Moore predicted noticeable relief by late summer.
"I anticipate by the end of the summer, we'll be seeing gas that's closer to $3 a gallon, and that's like a tax cut for the American consumer," he said.
Moore also argued that lower energy costs should help ease broader inflationary pressures.
"We got a [4.2%] inflation rate last week for the month of May," he said. "I think you're going to start to see it come down pretty quickly to that 2% target and hopefully lower than that."
Moore said rising food prices have also been affected by disruptions tied to the Strait of Hormuz.
"I'm going to make a prediction to you, that we will see that [4.2%] inflation rate go down to below 2%," he said. "I think we're going to see $3 to $3.50 a gallon gasoline."
Asked when Americans could begin feeling the effects, Moore pointed to the Federal Reserve's upcoming policy meeting and the arrival of Fed Chairman Kevin Warsh.
"I think within the next six weeks or so, you're going to really start to see big improvement," Moore said. "We can't tolerate a 4.2% inflation rate."
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