Federal Reserve Chair Kevin Warsh enters this week’s policy meeting with traders pricing a rate increase. Renewed fighting between Iran and the United States has pushed crude oil above $100 a barrel, raising fears that energy costs will feed into inflation.

The meeting starts on Tuesday and will be Kevin’s second as Fed chair. One week ago, futures markets placed the chance of a quarter-point increase below 10%. By Friday, that probability had climbed to 36%.

Investors now fully expect one increase by September. They also expect one or two more quarter-point hikes within nine months. Oil has been unstable since the war began in late February as Washington and Tehran alternated between pauses and fresh attacks.

Traders had bet that closing the Strait of Hormuz would cause only a brief inflation problem, even though about one-fifth of the world’s oil normally passes through that route.

Rising oil prices push traders to prepare for tighter Fed policy

That belief weakened after crude broke above $100. Investors sold government debt across the United States and Europe, sending bond prices lower and yields higher.

The 10-year U.S. Treasury yield reached its highest point in 18 months. Ten-year yields in Germany and France also climbed to levels not seen in more than 15 years. Long-term yields rise when markets expect lasting inflation.

Kevin has still another reason to think about higher rates, given the most recent U.S. statistics, which show a robust labor market as weekly unemployment claims dropped to their lowest level since 1969 on Thursday. Although consumer inflation decreased to 3.5% in June, it is still much higher than the Fed’s target of 2%. Officials may be less inclined to wait if the economy is doing well, there are few layoffs, and oil prices are high.

Kevin does not provide explicit clues prior to making judgments. As a purposeful return to policy decisions, he has advocated the termination of advance signals. “If we get policy right, and we will, the inflation surge of the last five years will be a thing of the past,” he said to lawmakers this month.

Kevin doesn’t say anything more. He has not disclosed which inflation metric he favors or which economic data he believes to be most reliable. Rather, he has requested that internal task groups examine those inquiries. This contrasts with the Fed’s more liberal approach over the previous 20 years.

Kevin keeps policy debates private as Congress presses for clearer answers

At his White House swearing-in ceremony in May, Kevin thanked former Fed chair Alan Greenspan for being the first person to “show me what this role demands.”

Alan died last month at age 100 and was known for answers that left listeners guessing. He once joked, “If I seem unduly clear to you, you must have misunderstood what I said.”

Kevin gave more than five hours of testimony before Congress this month but offered few firm views. Some answers differed from his earlier statements. Representative Ritchie Torres, a New York Democrat, read part of Kevin’s April nomination testimony back to him.

During that hearing, Kevin had spoken favorably about an inflation gauge that removes the largest monthly price changes instead of using the measure the Fed has relied on for years. When Ritchie asked about it, Kevin denied backing one.

“None of those are very good measures of underlying inflation,” Kevin said. “If I had a preferred measure, I wouldn’t have called for a task force to go back to first principles.”

Kevin has not promised to keep the press conference schedule used by his predecessor, Jerome H. Powell. Jerome spoke after every policy meeting, explained how officials saw the economy, and described views inside the rate-setting committee. Kevin’s communications task force is reviewing that schedule.

Reporters asked Kevin last month what would lead the Fed to raise rates. He replied, “I can’t give any forward guidance about what we’re going to do next. The good news is, we’ll be meeting in six weeks,” referring to Tuesday’s meeting. He has said he wants every policy gathering to be a “family fight,” with officials arguing in private instead of announcing the result before the meeting begins.

If you’re reading this, you’re already ahead. Stay there with our newsletter.