Do higher energy prices mean tighter monetary policy? in World Economy News 28/04/2026 Rising energy prices driven by the Iran conflict are pushing headline inflation higher, but central banks on both sides of the Atlantic are unlikely to respond with aggressive monetary tightening, according to UBS Investment Research. The conflict represents “a classic energy supply shock,” where supply constraints, not higher demand, are driving energy prices up, UBS Chief Investment Officer Claudia Panseri said in a note. The Dallas Fed’s own analysis shows incremental price pressure from energy rises tends to fade within months, with core inflation remaining little changed. The Federal Reserve now looks set to delay its first rate cut to September from June, though UBS still expects a total of 50 basis points in reductions through 2026. Fed Chair Powell has recently underscored that monetary tightening is “typically not the right response to supply shocks,” preferring to look through such events unless inflation expectations become unanchored. Markets are currently pricing in two ECB rate hikes by year-end. UBS, however, pushes back on that view. Although the ECB’s own March scenario analysis showed the Iran conflict hitting inflation harder than growth, a signal for a central bank with a sole inflation mandate to consider hikes, UBS argues the current economic backdrop differs materially from 2022, when inflation was running close to 6% and interest rates sat at historic lows. Today, the labor market has softened and monetary policy has only recently returned to a neutral setting. The ECB is expected to keep rates on hold at its April meeting. “We think markets have priced in too much tightening from top central banks in recent weeks,” Panseri added. The rise in benchmark government bond yields across , , and has improved the appeal of short-duration, high-quality bonds. In a scenario where growth concerns deepen and financial conditions tighten further, longer-duration, higher-quality bonds are seen as better positioned. Traditional equity and bond portfolio correlations are beginning to converge, eroding diversification benefits. UBS recommends upside exposure to the U.S. dollar, , and broad commodities as short-term hedges, with seen as offering medium-term value. On the diplomatic front, the U.S. and Iran remain far apart over Iran’s nuclear program, war reparations, and control of the Strait of Hormuz. UBS’s base case holds that both sides retain an incentive to reach a diplomatic resolution. An early end to the conflict, UBS notes, would likely register as a short-term bullish signal for markets, even if longer-term questions over Strait security and Iran’s nuclear stockpiles remain unresolved. UBS advises incremental portfolio adjustments rather than abrupt shifts, and recommends diversifying away from at-risk equity markets toward structural growth and defensive positions. Source: Investing.com 2026-04-28 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1', 'fbjssdk'); load('https://apis.google.com/js/plusone.js', 'gplus1js'); load('//platform.twitter.com/widgets.js', 'tweetjs'); } if (w.addEventListener) { w.addEventListener("load", go, false); } else if