Geopolitical Tensions Impacting Inflation

Geopolitical tensions in the Middle East, particularly US and UK airstrikes on Houthi targets in Yemen, have disrupted global supply chains and pushed up freight costs, leading to concerns from various countries. The military action reflects the deepening fallout from the Israel-Hamas war and involves the US against an Iranian proxy, leading to increased aggression in the region. Despite the limited impact on global economy, the added costs of recalibrating shipping routes and upward pressure on energy prices pose a challenge for central banks trying to achieve a 2% inflation target.