Macro Insights Weekly - Inflation versus interest rates

Middle East conflict and AI-driven demand have lifted inflation, but the shock looks manageable. Expect divergent policy respnse, with Korea/Taiwan tightening and India pausing.
The IMF sees global inflation rising to 4.7% in 2026, up from 4.1%.
War, tariffs, AI demand, and resilient consumption are key inflation drivers.
The inflation shock appears milder than the 2022/23 surge.
Korea and Taiwan risk overheating and may need tighter policy.
India has room to pause, while Indonesia may need modest further tightening.