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Iran conflict forces central banks into sharp policy rethink
The escalating crisis in the Middle East has dramatically changed the outlook for global central banks, with the huge supply shock posing a difficult trade-off between underpinning growth and countering inflation. For emerging Asian central banks, cutting interest rates has become a risky bet not just because of the added price pressure from higher fuel costs, but the risk of triggering capital outflows through worsening terms of trade with the U.S. The Reserve Bank of India, for one, expects to focus more on supporting growth by keeping interest rates low, sources have told Reuters. But a rush towards the safe-haven ... (full story)
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