Global central banks are facing pressure to raise interest rates in response to persistent inflation driven by supply shocks in the energy market. As tensions escalate in the US-Iran conflict, energy prices have surged, prompting fears that monetary policy adjustments are necessary, despite hopes that such measures were behind us. HSBC has issued a forecast that anticipates rate hikes, even in the event of a ceasefire, due to the lasting damage already inflicted on global supply chains and energy dynamics.
#What is the Current Oil Situation and Its Implications?
The Strait of Hormuz is a crucial shipping lane through which approximately 20 percent of the world's oil flows. Following the escalation of the US-Iran conflict on February 28, 2026, energy markets reacted strongly, leading to brent crude prices temporarily surging above $126 per barrel. Prices have remained consistently high, with levels above $100 per barrel being common since that time. HSBC had warned prior to these events that a prolonged conflict would exacerbate global inflation through increased expenses associated with energy, fertilizers, and metals.
#Who is Expected to Raise Rates and When?
HSBC indicates that the European Central Bank and the Bank of England are likely to initiate rate hikes during the June to July 2026 timeframe. Meanwhile, the Federal Reserve is currently maintaining its rates in the 3.5% to 3.75% range. Notably, the Fed has revised its inflation projections for the year upward, altering the expected rate from 2.4% to 2.7%. This shift signals emerging concerns about stagflation-like conditions linked to the ongoing energy crisis.
Additionally, outside the developed nations, HSBC predicts that countries such as the Philippines, India, and Indonesia will also implement rate increases during the latter half of 2026.