BMI Chief Economist warns inflation pressures are far from over

• Markets are pricing in an optimistic view of a U.S.-Iran deal by mid-to-late June, preventing a non-linear impact on the global economy.
• The primary global concern is inflation, particularly from transport and energy costs, leading to increased inflation forecasts and central bank rate hikes.
• Short-term inflation is expected to remain elevated, but the energy shock is projected to dissipate into year-end.
• The control over the Strait of Hormuz is a critical geopolitical issue, with Iran leveraging its position, and the international community seeking to avoid setting a precedent for control over global waterways.

The BMI Chief Economist discusses market optimism regarding a near-term resolution to the U.S.-Iran conflict, expecting a deal by mid-to-late June. However, he highlights inflation, largely driven by transport and energy, as the bigger global problem, which has put central banks and bond markets on the back foot. He anticipates the energy shock to dissipate by year-end.