Iran War Forces Central Banks into Inflation Trap as EM Growth Crumbles

The Iran war has unleashed energy shocks that disproportionately batter emerging markets, downgrading IMF growth forecasts to 3.9% for 2026 while inflation climbs to 5.5%. Central banks face a stark choice: tighten policy amid weakening demand or risk entrenched price pressures. This stagflationary pivot tests post-pandemic resilience, with Fed signals and dollar volatility as pivotal wildcards.