On July 23, 2026, Brent crude oil broke through $100 per barrel intraday (spot price on the 24th: $100.69), the first time above $100 since late May; in about 20 days, it has risen by roughly 40%. The trigger was the escalation of the US-Iran conflict + the Houthis’ attacks on Red Sea Saudi oil tankers, with the Strait of Hormuz and the “dual passage” of the Strait of Mandeb simultaneously coming under pressure.

The moment oil prices broke through $100 rewrites the playbook for global central banks—from a collective focus on “when to cut rates” to “whether to raise rates again.”

Federal Reserve: Maintaining the 3.50%–3.75% target range at its July 28–29 meeting remains the baseline case, but CME data shows the probability of a rate hike in September has surged from 53% a week ago to 82%; even the probability of a 25 bp hike directly next week is around 35%. In the US, June CPI rose 3.5% year over year and core CPI 2.6%. With oil prices stoking inflation again, the rate-cut narrative has basically gone out.

European Central Bank: On July 24, it held steady (deposit rate 2.25%), but Lagarde admitted that “internal discussions about raising rates” took place, leaving September as a live option; she warned that the energy second-round effects could keep euro area inflation above 2% through the first half of 2027. Markets have already priced in two additional rate hikes this year.

Bank of England: The 10-year UK government bond yield has held above 5% at its highest level in nearly 20 years. The upcoming meeting is likely to keep policy unchanged, but expectations for easing have been cut in half.

Bank of Japan: Inflation has risen for the first time in three months. The yield on 2-year Japanese government bonds has touched a 31-year high. In policy circles, the tone on “accelerating rate hikes” has turned more relaxed, but the yen’s weakness still ties its hands.

People’s Bank of China: “Putting myself first” + enhancing FX exchange-rate flexibility to offset imported inflation. PPI is affected by the oil-price impulse, but CPI’s transmission via domestic demand remains weak. The probability of direct rate hikes this year is extremely low. The window for further reserve cuts and rate cuts is likely to be judged by the timetable of fiscal bond issuance in the third quarter, though external high interest rates compress room for easing.

At bottom, it’s a dilemma: raising rates to fight inflation risks triggering stagflation, while not raising rates and allowing a second-round transmission of oil prices is even more troublesome. Global bond markets are paying respect first by “falling”—German 10-year yields have broken 3.21% (the highest since 2011), French 10-year yields have broken 4%, and US 10-year yields have tested 4.68%. The market is voting with yields: higher for longer.

Over the next three weeks, watch three things: whether the US-Iran conflict leaves a negotiating opening, the actual shipping volume through the Strait of Hormuz, and whether the July FOMC statement treats the oil price impact as “one-off” or “persistent.” Once the latter is confirmed, the “inflation + high interest rates” combination in global asset pricing will be re-locked.