Gulf Tensions Spark Stagflation Fears as Oil Prices Soar

Renewed hostilities in the Gulf have reignited concerns over stagflation, which could undermine hopes for global growth.

The recent increase in Brent crude prices above $100 a barrel and European natural gas prices heading for their biggest monthly gain since March are adding to inflation pressures.

The U.S. imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the European Union and China, which could raise prices further.

Central banks may need to keep interest rates elevated despite weakening economic growth due to persistently high energy costs and trade tensions.

The Fed may keep rates unchanged in its July meeting but turn hawkish later, with a 30% chance of a quarter-point hike priced in by investors.