Central banks are leaning hawkish on an energy-driven inflation shock from the Middle East conflict, according to this week's published research and official commentary.
European voices argue the oil shock is too large to simply "look through," even as a measured response remains appropriate. One UK rate-setter has publicly pushed for leaning harder against second-round wage effects, citing above-target pay growth and tighter labour markets than previously assumed. A Swedish deputy governor flagged upside inflation risks warranting slightly faster rate normalisation, with a fresh decision due in two weeks. The Philippine central bank is also sounding hawkish around oil and El Niño risks.
India held its repo rate at 5.25% with a neutral stance, with Governor Sanjay Malhotra signalling patience and data-dependence. China's PBOC and Kazakhstan struck balanced tones focused on liquidity and price stability.
Japan's latest financial stability review judged the system stable but flagged Middle East, AI-investment and non-bank risks, with further rate hikes from 1.25% expected. Household inflation expectations there sit at 3.1%.