$100 oil price may linger throughout the year! Bank of America warns: Iran war is dropping a "stagflation bomb" on the global economy.

Analysts at Bank of America in the United States predict that as a result of the Iran war's impact, even if the conflict ends in a few weeks, the year will still face economic growth slowdown, rising inflation, and oil prices at $100 per barrel. Bank of America economist Claudio Irigoyen and his team wrote in a report on Wednesday, "So far, the 'benefit' brought by the war is: mild stagflation," referring to the economic phenomenon of high inflation coexisting with economic growth slowdown. Economists say that while the global economy has reduced its dependence on oil, its sensitivity to natural gas and fertilizers has greatly increased. This poses significant risks to Europe and developing economies. Irigoyen wrote, "The Iran war is not just an oil shock - it is an energy shock." Economists predict that the US economic growth in 2026 will be impacted by 50 basis points, falling to 2.3%. Current forecasts show that the headline inflation rate in 2026 will reach 3.6%, higher than the previous forecast of 2.8%. On a global scale, economists have also lowered GDP forecasts to 3.1% and raised inflation expectations to 3.3%. Irigoyen wrote, "This matches the characteristics of a stagflation shock. Based on our new baseline assumption that oil prices will remain around $100 per barrel for the remainder of 2026, the impact of this shock on inflation will be earlier and more significant than on GDP growth." Bank of America's analysis assumes that the war will settle by the end of this month. However, Irigoyen wrote that if the conflict escalates and drags on, "significant increase in energy prices, coupled with substantial adjustments in asset prices, could lead to a global economic recession." Economists still expect the Federal Reserve to cut interest rates by 50 basis points this year, but the timing of these rate cuts has been postponed from summer to fall, acknowledging that "the risk of these rate cuts not materializing is high." Wall Street is increasingly delaying expectations for rate cuts, with Goldman Sachs also predicting two rate cuts in the fourth quarter. Goldman Sachs analysts wrote in a report on Wednesday, "The labor market is softening, and wage growth has been below the level consistent with a 2% inflation target, and inflation expectations are stable." They added, "In this context, an oil shock sufficient to raise concerns about sustained inflation could also cause significant economic damage and possibly lead to an economic recession." Earlier this week, Federal Reserve Chairman Powell stated that inflation expectations are "very stable," and the Fed's "bias is to ignore any form of supply shock." His comments eased growing concerns in the market about a potential unexpected rate hike later this year.