The Middle East conflict, which has seen a re-escalation of tensions, has had a significant impact on central banks as well as market expectations regarding their respective policy stances.
Monetary policymakers were already operating in a volatile global macroeconomic environment amid the trade-related uncertainty that developed last year.
The market is very much leaning towards the prospect of higher rates between now and year end.
In terms of the actual evolution of official interest rates over the remainder of 2026, the direction of travel will be in a large part determined by developments in the Middle East conflict.
