Even if the US-Iran agreement is reached quickly, HSBC still believes "inflationary effects will continue to exist, and more central banks will raise interest rates."

In the latest report released by HSBC's global economic team, the bank raised its forecast for the average price of Brent crude oil in 2026 to $95 per barrel and warned that even if the US and Iran quickly reach an agreement and the Strait of Hormuz reopens, the impact of supply shocks on global inflation is difficult to reverse, and more central banks will be forced to raise interest rates. At the time of the report's release, the Strait of Hormuz has been closed for nearly 12 weeks due to the US-Iran conflict, and market pricing is diverging on this matter. The S&P 500 in the US has reached a historic high not just driven by tech stocks but by a broad increase in profits. However, the sell-off in the bond market is intensifying, with yields on US and UK 10-year government bonds reaching near highs in recent years. The economy still has resilience, and energy prices are quickly transmitting to the end consumer. HSBC pointed out that actual economic activity data is better than expected: strong performance in US employment and business inventories in early 2026, steady GDP growth in the UK in the first quarter, and ongoing export growth in China in April -- inventory rebuilding is the main support. But global confidence indicators are declining, and the continued closure of the Strait means that the short-term outlook will deteriorate further. In poorer regions such as ASEAN, South Asia, and Africa, there are signs of fuel shortages, abandoned crops, and early closure of businesses. Energy prices are quickly transmitting to the end consumer. In just the months of February to April, the energy contribution to CPI inflation in major economies in the US and the Eurozone has exceeded 1 percentage point. The impact in Southeast Asia is more severe -- reaching 3.9 percentage points in Thailand and 2.8 percentage points in the Philippines. Core inflation in the US is also rising, driven by airfares and rents. Pressure on food prices is increasing in the Philippines, Mexico, and India. Raising oil prices to $95, the real risk lies beyond crude oil HSBC has raised its forecast for the average price of Brent crude oil in 2026 to $95 per barrel, an increase of $15 from before, assuming a gradual resumption of the Strait starting from mid-June and normalizing by the end of the third quarter. The revised baseline scenario is between the "base" and "worse" scenarios. Natural gas prices are better than expected, largely aligning with HSBC's "good" scenario, to some extent alleviating financial pressure in Europe. But the core warning of the report is that the risk is not only in crude oil. Finished products (jet fuel, diesel), fertilizers, sulfur, plastic raw materials (naphtha, ethylene glycol), aluminum, and helium are all facing shortages, with finished product inventories lower and more fragile than crude oil. The Middle East accounts for 15%-20% of global exports in several key commodities. The downstream impact will transmit along the supply chain to automobiles, semiconductors, packaging, and food. Asia -- especially Thailand, Singapore, South Korea, and the Philippines -- is most dependent on supplies from the Middle East. HSBC's judgment is: "Every day the Strait remains closed, the range of commodities and petroleum-related products affected expands, and businesses have no choice but to raise prices." Central bank rate hikes: not overreacting, but defending credibility Facing questions about whether rate hikes are premature, HSBC points to the lessons learned from the slow action in 2022. Analysts write in the report: "Failure to sew a stitch in time necessitates many stitches later -- now it's about credibility." Specifically, the bank predicts that the European Central Bank will raise rates by 25 basis points in June, July, and September (if the Strait reopens immediately, this may only happen once), reversing in 2027; the Bank of England and the Bank of Japan may raise rates in June-July; the Federal Reserve is expected to maintain rates unchanged in 2026 under the base scenario, but risks of hiking rates within the year cannot be ignored under new chairman Kevin Warsh, given the supply shock from tariffs and immigration policies. Emerging markets such as the Philippines, India, Indonesia (in the second half of the year), Poland, the Czech Republic, and South Africa are expected to further raise rates, with currency depreciation increasing pressure to raise rates. Australia and Norway may have already completed this round of rate hikes. Overall, HSBC's overall judgment is hawkish and cautious: supply-side shocks have features of persistence and non-linear diffusion, with Asia and Europe being more fragile than the US. The biggest uncertainty is still when the conflict will end -- every day it is prolonged, the cost of "sewing a stitch" becomes higher.