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Central Banks Under Pressure: Steering the Economy Through an Energy Shock
April 2026 by Valentin Bissat, Chief Economist & Senior Strategist at Mirabaud Asset Management If central banks were pilots, today’s global economy would look like a flight through turbulent skies: rising energy prices below, geopolitical storms on the radar, and passengers anxiously watching every move from the cockpit. The good news? This time, policymakers are far better prepared than they were during the inflation shock of 2022. Inflation Is Back in the Headlines – But This Time, It’s Different Tensions in the Middle East, followed by a fragile ceasefire in Iran, has once again highlighted how sensitive global inflation remains to energy prices. Oil and gas costs surged sharply in March and April, pushing U.S. gasoline prices close to levels observed during previous episodes of geopolitical stress. That said, today’s developed economies are far less vulnerable to energy shocks than they were during the oil crises of the 1970s, not only because of substantial gains in energy efficiency, but also because economic structures have shifted decisively towards services rather than energy‑intensive manufacturing. As a result, despite higher energy prices, the risk of a recession has so far remained contained. Despite these echoes of the past, the economic environment in 2026 is also fundamentally different from that of four years ago. Back then, inflation surged because two forces collided at once: a powerful supply shock, driven by disrupted energy and supply chains, and an equally powerful demand shock, fuelled by massive post‑pandemic fiscal stimulus and ultra‑low interest rates. Central banks were caught off guard. Policy rates were near zero, inflation expectations were drifting upward, and tightening came late and abruptly. Today, central banks start from a very different position. Higher Rates, Cooler Demand, More Room to Manoeuvre Interest rates are already at relatively high levels across developed economies. At the same time, global growth has slowed, and consumers are more cautious. Demand is no longer overheating. This changes everything. While higher energy prices are pushing inflation up again, the risk of a full‑blown inflation spiral, where rising prices feed into wages and expectations, appears much more contained. In economic terms, this looks more like a temporary supply shock than a runaway demand-driven boom. As a result, central banks do not feel compelled to react immediately or aggressively. Instead of slamming on the brakes,...
Iran War Oil Shock: Central Banks at a Crossroads
Oil prices surge, inflation rises, and central banks find themselves holding instruments designed for demand-side problems while facing a supply-side shock they cannot directly influence. The 1973 oil embargo created the template. The 2022 Russia-Ukraine energy crisis reinforced it.
How Oil and Energy Prices Impact Inflation, Rates and Markets
Discover how rising energy prices influence inflation, central bank policy and interest rates, and what this means for financial markets.
Treasury Markets Brace for a New Era of Inflation Risk as Iran War, Oil ...
U.S. Treasury yields held near multi-month highs on Friday as investors confronted a rapidly shifting global economic landscape shaped by war-driven energy shocks, stubborn inflation, and growing uncertainty over how far central banks may have to go to contain another wave of price pressures. The benchmark 10-year Treasury yield traded around 4.39%, while the two-year […]
