Conflict in the Middle East may create new risks to the global economic outlook, leaving central bankers facing renewed inflationary pressures even as they continue to deal with the economic fallout of the COVID pandemic and Russia’s invasion of Ukraine a year ago. Iran-backed Hamas terrorists struck Israel over the weekend, killing at least 700 in the deadliest attacks the country has experienced in decades.
Federal Reserve officials have been monitoring a recent rise in U.S. Treasury bond yields for indications that investors may have pushed financial conditions beyond what’s needed to cool inflation and raised the risk of cooling the economy too dramatically – potentially derailing the Fed’s desired "soft landing" for this inflationary cycle. U.S.