Analyst: Rising oil prices may become a more structural driver of inflation

ME News Report, April 7 (UTC+8), Abu Dhabi First Bank analysts stated in a report that the strength of oil prices has already become and will continue (at least in the short term) to be a more structurally driven inflationary pressure. The analysts pointed out that inflationary pressures have led to a sell-off in interest rates despite the fading expectations of central bank rate cuts. Previously, the market anticipated the Federal Reserve would cut rates two to three times this year, but these expectations have now been dismissed. LSEG data shows that the currency market currently expects the U.S. policy rate to remain largely unchanged by 2026, with very slight tightening tendencies. The market has even priced in more hawkish rate hike scenarios by the European Central Bank and the Bank of England by the end of this year, with increases of 74 basis points and 56 basis points respectively, “which is largely a result of Europe’s imported energy inflation.” (Jin10) (Source: ODaily)