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[Strategists Turn to Inflation Concerns, Warn of Potential More Aggressive Rate Hikes by the Fed] ⑴ A global strategist previously argued that the Fed should maintain interest rates, based on the fact that the core consumer price index had hovered around 2% for the past three years, with slowing wage inflation and productivity growth offsetting upward pressure on commodity prices. ⑵ Their stance has now clearly shifted, expressing concern about the short-term inflation outlook. The core trigger is the widening divergence between crude oil and refined product prices. ⑶ Although West Texas Intermediate (WTI) crude and Brent crude remain above $100 per barrel, the gasoline, diesel, and jet fuel markets are experiencing an environment of extreme scarcity in pricing. ⑷ The head of commodity research at the firm pointed out that refined product prices, especially crack spreads, have risen to unprecedented levels relative to crude oil, resulting in an unprecedented disconnect between crude oil and refined product pricing. ⑸ Retail gasoline prices correspond to crude oil levels far higher than current actual oil prices, and diesel and heating oil users are also facing significantly deviated prices. ⑹ The main reasons for this divergence include damage to oil infrastructure in the Middle East and Russia, and abnormally low inventories that should be at seasonal highs, with diesel inventories falling to a near 30-year low. (7) The strategist believes that if the related conflicts cannot be resolved quickly, refined oil prices may jump further due to excessively high refining margins. (8) He also mentioned that retail, wholesale, and residential construction sectors may use the crisis to drive profit-driven price increases; if this phenomenon takes hold, the increased costs will be passed on to consumers. (9) If the aforementioned price increases continue, the Federal Reserve may ultimately have to raise interest rates at a much more aggressive pace than previously expected.