AhlulBayt News Agency (ABNA): The consequences of the U.S. and Israeli war against Iran have extended beyond the realm of geopolitics and reached the very heart of global economic policies, such that this war has become a multifaceted shock and has redefined the priorities of central banks in the world's major economies.
While the focus previously was on the timing of interest rate cuts to support economic growth, monetary institutions are now facing a more complex equation: how to curb inflation resulting from supply shocks without triggering a deeper recession or broader financial instability.
Rising energy prices, disruptions to supply routes, and increased transportation and insurance costs have redefined economic risks and have led policymakers to adopt a more cautious approach.
In this context, Luis de Guindos, Vice President of the European Central Bank, warned on March 26 that although European banks' direct exposure to the war is limited, the main risk lies in the potential for systemic pressures arising from the linkages between energy, credit, and financial markets.
This challenge is also clearly evident in the United States. Jerome Powell, Chairman of the U.S. Federal Reserve, announced on March 30 that the current interest rate (between 3.50 and 3.75 percent) remains appropriate, and that the bank prefers to assess the effects of the war and rising energy prices before making any new decisions.
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