Danske Bank: US-Iran conflict will not lead to an inflation shock

Golden Ten Data reported on March 5 that Danske Bank believes, based on its baseline forecast, that the US-Iran conflict is unlikely to trigger an inflation shock, or at least unlikely to have a substantial impact on the economic outlook of major central banks this year. The bank stated in its report that recent unexpected inflation increases in the eurozone, along with short-term rises in energy prices, have led it to raise its inflation expectations. Nevertheless, the bank believes that central banks still have a high threshold for responding to the recent rise in inflation expectations, so it continues to expect the European Central Bank to keep interest rates unchanged until the end of 2027. As for the Federal Reserve, Danske Bank expects it to cut interest rates in June and September. Although geopolitics will likely dominate headlines in the coming weeks, it is worth noting that tariff disputes may also return to the agenda at some point. Given that the legal basis for Trump's tariff policies is being questioned, US trade partners may seek more favorable agreements.