Axios

The Iran war is trapping the world's central banks with an energy shock that simultaneously undermines growth and stokes inflation, with no good policy response to either.

• Each of the world's most important central banks faces that dilemma in policy meetings this week.

Why it matters: From Tokyo to Washington, central banks that were on track to normalize policy are now paralyzed, unsure whether the energy price shock will prove more consequential in causing sustained inflation or in sapping growth.

Crude oil futures are at their highest levels in weeks amid the absence of a diplomatic endgame that frees up the Strait of Hormuz.

Why it matters: The soaring costs, combined with a spike in gasoline prices, mean further political pain for President Trump and Republicans.

This is shaping up to be a momentous week for the Federal Reserve. What comes next for the Fed's leadership has come into clearer focus in the last three days, but one big question hangs over the institution.

The big picture: On Wednesday, the Senate Banking Committee is set to advance Kevin Warsh's nomination to lead the Fed, after Sen. Thom Tillis (R-N.C.) indicated his satisfaction with the Justice Department backing down from its investigation of chair Jerome Powell.

Chinese regulators have ordered Meta to unwind its $2.5 billion acquisition of Manus AI, developer of a general AI agent that it claims can complete real-world tasks

Why it matters: It's an escalation of AI tensions between Beijing and D.C.

President Trump canceled the trip by his envoys Steve Witkoff and Jared Kushner to Islamabad due to the Iranian position in peace negotiations, he told Axios.

Why it matters: The envoys had been expected to meet with Iranian Foreign Minister Abbas Araghchi, in a trip designed to break a diplomatic stalemate and build momentum for a deal.

President Trump is governing like a man who will never face voters again, mortgaging his party's future on promises he won't be around to keep.

Why it matters: Trump's approval has plunged to a second-term low. His signature bets — tariffs, the war in Iran, redistricting — are curdling into long-term liabilities the GOP could carry long past November.

America is becoming more multiracial, but its data systems are still thinking in black and white.

Why it matters: Outdated measurement systems are shaping how elections are analyzed, health risks are tracked and civil rights laws are enforced.

U.S. envoys Steve Witkoff and Jared Kushner are expected to travel to Pakistan on Saturday for negotiations with Iranian Foreign Minister Abbas Araghchi, the White House said.

• Iranian state media denied that any meeting had been scheduled.

Why it matters: While President Trump extended the ceasefire with Iran, the diplomatic efforts haven't made any progress in recent days. The planned trip is an effort to break the stalemate and build momentum for a deal before Trump goes back to exploring military options.

The bottling up of Middle East oil is giving a lift to U.S. exports, but there are real limits on how much more they can grow.

Why it matters: President Trump keeps talking up U.S. exports as the Strait of Hormuz is blocked, and oil and gas exports give America more geopolitical leverage.

Persian Gulf countries like the United Arab Emirates have plenty of dollars, yet they're asking the U.S. for access to more — via what's called swap lines — and the Trump administration seems open to the idea.

Why it matters: The asks are less about finances and more about politics — a sign of how the U.S. is trying to maintain dollar dominance amid a changing geopolitical backdrop.