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2026-05-27 19:29:56
[Capital Economics: Concerns about the Iranian conflict triggering a global inflation and tightening cycle are excessive] (1) Capital Economics economists point out that concerns about the Iranian conflict triggering a sustained rebound in inflation and the start of a global tightening cycle seem excessive. (2) Although inflation in developed economies is expected to rise to 3% to 4%, a softening labor market, reduced fiscal support, and higher starting points for interest rates make the risk of a sustained "second-round effect" of inflation lower than in 2022–2023; many policymakers tend to ignore temporary inflation driven by energy factors. (3) Stagflation will only occur in the extreme scenario of a prolonged blockage in the Strait of Hormuz and severe damage to critical infrastructure; in that case, high energy prices and commodity shortages may force central banks to raise interest rates again until economic slowdown in 2027 prompts a policy shift.
