•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Europe and the United Kingdom warned they may need to raise interest rates in coming months as central banks confront an energy shock linked to the Middle East conflict. On April 30, the European Central Bank and the Bank of England kept rates unchanged, but both signaled that rate hikes could become necessary if energy costs rise further and inflation stays elevated.
ECB President Christine Lagarde said the Governing Council discussed raising rates “carefully and thoroughly” before deciding to hold. She emphasized that “the longer energy prices stay high, the greater the impact on inflation and the economy.”
Bank of England Governor Andrew Bailey said that if price pressures from the conflict become more severe, a “firm tightening” would be required. He also said the BoE would continue to monitor the situation closely and its impact on the UK economy.
The conflict, now lasting two months, has triggered an energy shock that threatens broader price increases. On April 30, Brent crude rose above $126 per barrel, the highest level since the conflict began, after U.S. President Donald Trump said sanctions on the Hormuz Strait could last for months.
Hetal Mehta, chief economist at St James’s Place, said the likelihood of rate hikes in the near term has become clearer, though the threshold for major hikes remains high compared with earlier periods such as after the pandemic or the Russia-Ukraine conflict. She said central banks will find it harder to wait “as the conflict drags on,” adding that the situation has moved beyond expectations of a quick resolution and a return of supply to normal.
Frederik Ducrozet, economist at Pictet Wealth Management, said the ECB has signaled there is a “probability of a rate hike in June.”
On April 30, data offered an early view of the conflict’s impact across the U.S. and Europe.
Bond markets rose on April 30, supported by slower U.S. growth and the ECB and BoE not signaling urgent rate hikes. The 2-year U.S. Treasury yield fell to about 3.89%.
Stock markets, particularly in the U.S., largely ignored the conflict. Wall Street was set to close the month with its strongest gains since 2020, led by technology stocks.
The ECB and BoE decisions followed the Fed’s April 29 move to keep rates at 3.5% to 3.75%, citing inflation that remains elevated, partly due to higher global energy prices. Unlike some other central banks, the Fed did not signal rate hikes in response to the Middle East energy shock, with statements hinting at potential rate cuts in upcoming meetings.
Neil Shearing, global chief economist at Capital Economics, said central banks are in a better position than in 2021-22, when rates were very low, making aggressive tightening cycles less likely. However, he added that “the longer the conflict lasts, the more central banks will need to act to demonstrate commitment to price stability and keep inflation expectations anchored.”
Premium gym chains are entering a “golden era” that is ending or already in decline, as rising operating costs collide with shifting consumer preferences toward more flexible, community-based ways to exercise. Long-term memberships are shrinking, margins are pressured by higher rents and facility expenses, and competition from smaller, more personalized…
