Capital Economics

Iran’s attack on Israel over the weekend represents the possibility of a wider conflict in the Middle East and has made global markets more worried about uncontrollable risks. Capital Economics said that heightened tensions in the Middle East after Iran attacked Israel may give the Federal Reserve more reason to slow down the pace of raising interest rates, as soaring oil prices will disrupt the Fed’s battle with central banks. Neil Shearing, chief economist at Capital Economics, said in a report on Sunday that the main risk facing the world is whether Iran and Israel will escalate their conflict into a broader regional conflict, and how the energy market will react. He said that rising oil prices will make inflation targets in advanced economies more complex, but only when energy prices become a key driver of core inflation rates will they likely have a substantial impact on central bank decision-making. According to the White House, it is working hard to prevent the situation from expanding further. Biden is said to have communicated with Israeli Prime Minister Benjamin Netanyahu that the…