CICC: Iran situation escalates, European and American central banks' rate cut expectations fully reversed to rate hike expectations

Ask AI · What economic concerns lie behind the policy reversals by central banks in Europe and the U.S.?

CICC research reports that the situation in Iran has escalated further in recent days, oil prices have risen again, and worries about stagflation in the U.S. and Europe have continued to heat up. Last week coincided with the “Super Central Bank Week,” when the Federal Reserve, the ECB, and the Bank of England collectively issued hawkish signals. This prompted investors to significantly raise their expectations for the monetary policy path. In the futures market, the implied timing for Federal Reserve rate cuts has been pushed back to the second half of 2027; in 2026, there may even be some expectation of rate hikes. Rate-cut expectations for both the ECB and the Bank of England have also flipped to rate-hike expectations. If overseas central banks begin rate hikes, it will cause global macro liquidity to shift from loose to tight, triggering a sharp sell-off across global stocks, bonds, and gold. Under oil-price shocks, the question of how central banks choose policy is a core issue in the global asset-pricing framework. CICC believes there may be a significant discrepancy between market pricing and expectations.