Ever since it was clear that the US/Israeli attempt to destroy Iran has backfired, it was easy to see that the global economy would face an energy crisis. And now it is clear that the effects will be long lasting, the crisis is intensifying into outright supply disruption which higher prices won’t easily resolve.
The consequences will be to drive economic activity into a serious downturn along with far higher producer costs for energy and energy derivatives, particularly fuel for product distribution and farming. Separately and adding to price pressures is a perfect storm brewing for food prices; a combination of poor crop yields due to drought, Ukraine’s grain exports being cut off, and a vicious el Niño.
It is the worst of worlds for central bankers in the G7. To tackle higher consumer prices, interest rates must be increased: that’s one of their two mandates. But an inevitable slump in business activity and the increase in unemployment requires
