HSBC economists are warning that central banks globally are poised to raise interest rates again, as supply shocks from the US-Iran conflict push energy prices to levels monetary policymakers can no longer ignore. The forecast, dated around May 18, 2026, suggests rate hikes will occur even if a ceasefire materializes, as damage to global supply chains and energy markets is already done. Inflation remains sticky, and central banks are prioritizing price control over growth protection.
Roughly a fifth of the world’s oil passes through the Strait of Hormuz. When the US-Iran conflict escalated on February 28, 2026, the threat of closures sent energy markets into a panic. Brent crude temporarily spiked above $126 per barrel and has remained elevated above $100 per barrel since. HSBC flagged this dynamic in April 2026, warning that an extended conflict would drive global inflation higher through rising costs in energy, fertilizers, and metals.
HSBC expects the European Central Bank and Bank of England to raise rates in the June-July 2026 window. The Fed is holding its rate band at 3.5%-3.75%, but its year-end inflation projection has been revised upward to 2.7% from 2.4%, signaling growing anxiety about stagflation-like conditions driven by the energy shock. Beyond the developed world, HSBC anticipates rate increases from the Philippines, India, and Indonesia during the second half of 2026.