White House Spurns Return to June Iran Memorandum, Complicating Hormuz Reopening Push

The preliminary agreement, signed by President Trump at the Palace of Versailles and negotiated with the assistance of Vice President JD Vance, set out three linked objectives: reopening the Strait of Hormuz, restarting talks on Iran's nuclear program and ending the war. In exchange, the framework envisioned sanctions relief and access to Tehran's frozen cash around the world. People familiar with the matter described the current refusal to return to those terms as a complication for diplomatic efforts that had picked up this week.

That framework broke apart within weeks after Iran began targeting ships to assert control over the crucial waterway, according to the people familiar with the matter. The decision not to revive the June terms removes, at least for now, the earlier mechanism that had linked sanctions relief and frozen cash to the reopening of the Strait of Hormuz.

Fed's Collins had already pointed to the Hormuz situation as part of her inflation assessment. On Aug. 25, Collins said she considered disinflation the most likely outcome based on limited additional tariffs and progress on reopening the Strait of Hormuz. A separate report carried the same theme, saying Collins indicated that holding rates depends on progress on inflation.

That leaves the White House decision at odds with one of the premises Collins cited two days earlier. Her most-likely disinflation scenario was expressly conditioned on progress reopening the waterway, and the June framework's collapse leaves that progress uncertain. Her separate emphasis on inflation progress means the rate path remains tied to disinflation rather than to the diplomatic framework.

The people familiar with the matter did not describe an alternative framework for reopening the waterway or restarting nuclear talks. With the administration declining to return to the June terms, the reopening of the Strait of Hormuz and the nuclear restart remain without the original mechanism that had tied them to sanctions relief and access to frozen cash.