Energy shocks and high rates fuel global inflation and cost pressures

The continuation of the Russia-Ukraine war and attacks by Iran-backed Houthis in the Persian Gulf have limited flows of natural gas and oil, leaving global energy markets volatile and prices above $100 per barrel, with forecasts that they could climb toward $120. This surge is feeding inflationary pressures worldwide, forcing monetary authorities to act. New Federal Reserve chairman Kevin Warsh raised the U.S. policy rate from 3.75% to 4% and hinted at a further hike before year-end, despite opposition from Donald Trump.

Meanwhile, European Central Bank President Christine Lagarde has begun a series of rate increases and is preparing for scenarios that could require sustained tightening through 2027. Analysts question whether such policy moves can offset the inflation caused by blocked energy supplies and rising costs for AI investments, especially in Europe where fuel and electricity prices are already straining households and industry.