If war creates high inflation, weak labor market, could call for holding rates steadyThe longer Middle East war remains unresolved, inflation and job risks increaseHigh inflation, weak job market would be challenging for FedMarch headline PCE inflation likely to hit 3.5% year over yearPossible energy price surge could have lasting inflation impactMarkets appeared to have undervalued risk of extended conflictWill be closely watching how inflation expectations react to conflictIf swift resolution to war, can look through energy price shockAfter series of shocks, it gets harder to look through inflation jumpWill closely watch jobs data for mounting signs of stressJob market break even rate now likely around zeroPeriods of negative job growth might not signal recessionChanges to job market make it challenging to analyze nowOutlook depends on how long rise in oil prices, how long conflict will persistThose are strong pillarsConsumers nervous about economy, but spendingBusinesses cautiously optimisticFed governor Christopher Waller is out with some comments on the Middle East conflict and what it means for monetary policy but the comments were surely written before today's news about opening the Strait of Hormuz so they may already be useless.On the economy itself, he sounded more constructive — consumers nervous but still spending, businesses cautiously optimistic, calling them "strong pillars." Waller was leaning dovish earlier in the year is now openly talking about holding but I'm not sure he will really want to walk that back post-war, especially if oil settles in the mid-to-high $70s. I think right now the war matters much more for monetary policy but note that we get Warsh's confirmation hearing on April 21 so that's going to be a spot to watch. We also get some more data next week, and it's been running hot. This article was written by Adam Button at investinglive.com.