Schroders global's director of global economic research, David Rees, stated that since the outbreak of the conflict in the Middle East in early March, although the markets have quickly absorbed expectations of interest rate hikes, central banks around the world have never intended to take action. Admittedly, the Reserve Bank of Australia did indeed raise interest rates by 25 basis points on March 17, even though it was already on track to tighten monetary policy. Decision-makers in other regions have taken a cautious approach, keeping interest rates unchanged and emphasizing the need to wait and see how the situation develops. He stated that both the dot plot of the Federal Open Market Committee and the market currently expect the Fed to cut interest rates once in 2026, which is in line with the basic assumption that Powell will take over as Fed chair later this year and relax monetary policy. However, a significant risk is that the ongoing price shocks will derail the plans to ease policy, and once core inflation heats up again, interest rate hikes will be back on the agenda. Fundamentally, the risk of entrenched high inflation in the United States seems greatest. After all, even though there have been some distortions in the data released after the Washington shutdown in 2025, the economic performance has been strong, and the inflation indicator preferred by the Fed - core personal consumption expenditures (PCE) inflation rate (excluding food and energy prices to reflect underlying inflation trends) - remains high at around 3%. It is worth noting that the United States, as a net energy exporter, may be somewhat shielded from the worst effects of price shocks, especially in terms of natural gas. Schroders global has always believed that the biggest risk to its base forecast is a resurgence of inflation. Once oil prices rise above $100 per barrel, it will significantly change the assessment of inflation, enough to push up the overall consumer price index of developed markets by about one percentage point. If disruptions in fertilizer supply in the Gulf region push up global food prices, it could trigger a second wave of commodity-related inflation. Calculated with a typical lag of 9 to 12 months, this shows that the upward trend in food inflation will start just as the more direct energy shock subsides, thereby prolonging price shocks until 2027. The current key factor is how high energy prices will rise and for how long. If the situation in the Middle East can be resolved quickly, commodity prices may fall by mid-year, and inflation will also ease, but the hope for this optimistic outcome is fading.