HSBC Economists Predict Continued Rate Hikes Despite Potential US-Iran Peace

HSBC economists Janet Henry and Besson Ellis have indicated in a report that even if the United States and Iran reach a peace agreement in the short term, more central banks are expected to raise policy rates. According to Jin10, they noted that even with the rapid reopening of the Strait of Hormuz, the risk of supply shocks and their impact on global inflation and growth will persist. The current rate hikes are more about maintaining credibility. Central banks in Australia and Norway were already facing inflationary pressures before the conflict and hope that the May rate hikes will be the last. The European Central Bank and the Bank of England may begin raising rates in June or July, and if the Federal Reserve increases rates, more emerging market economies might tighten their policies. HSBC expects the Philippines to further raise rates and anticipates that India and Indonesia will hike rates in the second half of the year.