Middle East War Forces Central Banks into Inflation Trap

Middle East conflict has upended global growth at 3.1% and spiked inflation to 4.4%, per IMF, thrusting central banks into a perilous trade-off: tame prices or risk recessions. Emerging markets face steeper shocks from dollar surges and energy spikes, while advanced economies grapple with anchored expectations. Persistent tensions could entrench higher neutral rates, fragmenting policy responses.