Central bank scanner: Oil shock collides with monetary policy

Central banks usually look through supply side shocks, however, the longer the Hormuz Strait closure lasts, the more policymakers will be forced to consider hiking rates to fight inflation.

Global growth is projected to fall to 2.7 percent in 2026 and 3 percent in 2027 from 3.4 percent in 2025. The pace for 2026 would mark the slowest growth rate sincethe pandemic concluded. Inflation is expected to reach 4.8 percent in 2026 before cooling to 3.6 percent in 2027. That compares to 3.4 percent in 2025. The war has renewed inflation concerns, which rise along with risks of demand destruction with each day the war persists. Oil prices could easily rise further in the second quarte...

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Authors: Benjamin Shoesmith, Brendan Rynne

Published Date: 09 April 2026