Three weeks ago, every major central bank was cutting rates or planning to. That consensus is dead. The Fed held rates on March 19 and raised its inflation forecast to 2.6 percent. [1] The ECB held at 2 percent and signaled that hikes are back on the table for the first time since 2023. [2] The Bank of England held unanimously at 3.75 percent and stated it is "ready to raise" if the oil shock feeds through. [3]

As this paper noted when Brent crossed $119 and central banks stopped pretending, the war created a policy trap: inflation rising from supply destruction, not demand excess. Politico reported the war has "confounded the world's central bankers," with swap markets pricing at least one ECB hike this year. [4] The Guardian argued hikes are the wrong tool for supply-driven inflation. [5] The central banks appear to disagree, or at least to prefer the wrong tool over no tool at all.

-- HENDRIK VAN DER BERG, Brussels