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Total eclipse of the doves
- 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.
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