Investing.com -- Bank of America cautioned that oil price volatility, rather than just price levels, could fuel inflation if certain prices rise with oil but fail to decline when crude prices fall.

The bank noted that disruptions in the Strait of Hormuz, combined with renewed Houthi attacks in the Red Sea, have caused oil prices to spike again following a fragile agreement. Markets are now repricing central bank rate hikes in response to the developments.

Bank of America said the indirect impact of oil price volatility can be inflationary if second-round effects persist. The firm questioned whether the traditional policy approach of looking through supply shocks remains appropriate after five years of above-target inflation.

The bank pointed out that supply shocks are becoming more frequent and persistent amid rising geopolitical tensions, making their temporary nature increasingly uncertain. Sound risk management may require a different approach than the textbook response of waiting for temporary inflation increases to dissipate, according to the firm.

The preliminary June durable goods orders report and Dallas Fed manufacturing index are scheduled for release today.