Central bankers in major economies are voicing concerns about the risk of inflation stemming from the war in Iran.
The US Federal Reserve Chair spoke of an accumulation of shocks — “the tariff shock, the pandemic, and now an energy shock” — that blunts progress on fighting inflation. The European Central Bank warned of a “material impact on near-term inflation.” Officials in Canada, England, and Japan also said they stand ready to act to address economic disruption, after facing criticism that they reacted too slowly to tame post-pandemic inflation.
The attacks on energy infrastructure mark a turning point in the conflict, a Singapore-based strategist said, hitting “the plumbing of the global energy system. What is unsettling markets now is the growing stagflation ​risk.”