A crisis is approaching as global central banks issue urgent statements.

How AI · How Soaring Energy Prices Simultaneously Drive Inflation and Suppress Growth?

As the surge in energy prices triggered by conflicts in the Middle East continues to disrupt global markets, central bank leaders from Washington to Tokyo have recently spoken out, revealing the serious challenges this energy crisis poses to the global economy.

At last week’s policy meetings, the Federal Reserve, European Central Bank, and Bank of Japan all chose to keep interest rates unchanged, while the Reserve Bank of Australia raised rates against the trend. Although their reasoning varied, all decision-makers reached a basic consensus: the energy crisis is becoming a key factor driving up inflation and harming economic growth.

Summary of major central bank statements:

Federal Reserve Chair Jerome Powell pointed out that rising energy prices will inevitably push up overall inflation. However, he also remains cautious, believing it is still “too early” to assess the potential scope and duration of this crisis’s impact on the economy.

European Central Bank President Christine Lagarde expressed concern about the outlook. She believes that the conflict in the Middle East has significantly increased uncertainty, with the economy facing dual pressures: inflation risks on the upside and growth risks on the downside.

Bank of England Governor Andrew Bailey emphasized close attention to developments and reiterated the inflation target. He stated that the bank is prepared to act as needed to ensure inflation returns to the 2% target.

Reserve Bank of Australia—the only central bank to raise rates this cycle—Governor Michele Bullock took a firmer stance. She warned that without action, price pressures could spread, making eventual economic adjustments more difficult.

Bank of Japan Governor Kazuo Ueda hinted that the bank remains on a tightening monetary policy track. He said the BOJ will closely monitor whether rising energy costs accelerate core inflation.

Currently, the global economy stands at a crossroads of energy cost volatility and monetary policy adjustments. Most central banks believe that the future direction of the Middle East conflict will be a key factor in determining the trajectory of global macroeconomic policies.