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

ME News Message: On April 7 (UTC+8), Abu Dhabi First Bank analysts said 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 factor behind inflationary pressure. The analysts noted that inflationary pressure has caused a sell-off in interest rates amid the fading expectations of central bank rate cuts. Previously, the market had expected the Federal Reserve to cut rates two to three times this year, but those expectations have been ruled out. LSEG data shows that the money market currently expects the U.S. policy rate in 2026 to remain basically unchanged, with only a very slight tightening bias. The market has even priced in a more hawkish rate-hike scenario for the European Central Bank and the Bank of England by the end of this year—rate hikes of 74 basis points and 56 basis points, respectively—“which is largely the result of Europe’s imported energy-driven inflation.” (Jin10) (Source: ODAILY)