Economists Predict Limited Rate Changes Amid Iran Tensions

Economists from UniCredit Bank's Investment Research Institute, Marco Valli and Daniel Vernazza, have projected that military actions in Iran are expected to last several weeks. According to Jin10, this situation may allow central banks to temporarily overlook short-term disruptions, with tensions and energy supply interruptions anticipated to ease subsequently. In their report, the economists stated that under their baseline scenario, the U.S. Federal Reserve is expected to cut interest rates only once this year, while the European Central Bank (ECB) is likely to maintain its rates unchanged until 2027. They further noted that the risks facing the ECB this year have shifted from additional monetary easing to potentially tightening policies earlier than planned.