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

ME News message, April 7 (UTC+8). In a report, analysts from Abu Dhabi First Bank stated that the strength of oil prices has already become—and will continue (at least in the short term)—to be a more structurally driven driver of inflationary pressure. The analysts pointed out that inflationary pressures have led to a sell-off in interest rates as expectations of central bank rate cuts faded. Previously, the market 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 largely 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, with rate hikes of 74 basis points and 56 basis points respectively: “To a large extent, this is the result of Europe’s imported energy inflation.” (Jin10 ) (Source: ODAILY)