Central Banks Pivot to Rate Hikes Amid Prolonged Middle East War - 조선일보

Central banks across major developed economies have adopted a holding pattern on interest rates while preparing for near-term rate increases, confronted by an inflationary shock emanating from prolonged Middle East conflict and its impact on global energy markets. The European Central Bank, serving 21 euro-using nations, announced on May 30 that it would maintain all policy rates unchanged: the deposit rate at 2.0% annually, the main refinancing rate at 2.15%, and the marginal lending rate at 2.4%. This decision represents a pause in a monetary easing cycle that had run for approximately one year starting June 2024, during which the ECB cut the deposit rate by 200 basis points before holding steady through seven consecutive meetings from July 2025 onward.

The inflation trajectory has shifted markedly since the war began in late February. Eurozone consumer price inflation rose to 3.0% in April (preliminary estimate) from 2.6% in March, signaling accelerating price pressures tied directly to energy cost spillovers from Middle East disruptions. This upswing has forced the ECB into a difficult policy trade-off: market expectations now price in rate hikes beginning at the June meeting, with two additional increases anticipated before year-end. The central bank's own assessment explicitly acknowledged this tension, stating that "upside risks of inflation and downside risks of growth have intensified"—a formulation that captures the stagflation dilemma central banks face.

The economic backdrop reinforces these concerns. Eurozone first-quarter GDP growth clocked in at just 0.1% quarter-on-quarter, a historically weak pace that raises legitimate recession risks should monetary tightening proceed too aggressively. However, ECB President Christine Lagarde moved to counter stagflation alarmism, arguing that current structural conditions differ fundamentally from the 1970s inflationary era, when monetary and fiscal policy regimes were markedly different and unemployment remained persistently elevated. Her comments suggest the ECB believes it can thread the needle between controlling inflation and maintaining growth, though the narrow first-quarter expansion suggests limited room for error.

The Bank of England adopted a parallel holding stance, also freezing rates amid comparable inflation concerns driven by energy cost transmission. Across the Atlantic, the Federal Reserve confronts similar Middle East-induced inflation pressures, creating a synchronized policy puzzle for global central banks. For investors, the positioning is now clear: rate hikes are coming, but their magnitude and pace remain contingent on whether oil prices stabilize and inflation expectations remain anchored. The next inflection point arrives in June when the ECB is widely expected to resume its tightening cycle.