Central banks face tough decisions as energy prices soar and inflation expectations increase
Category: Economy
The FTSE/CoreCommodity CRB Index has surged past the 420 mark as of September 8, 2026, marking a 30% increase since the military conflict between the U.S. and Iran began in late February, according to reports from *Nikkei Asia*. This rapid rise in commodity prices has reignited fears of a second inflation shock, reminiscent of the 2008 financial crisis, as the index approaches its all-time high of approximately 474.
The spike in the CRB Index is attributed to multiple factors, including the blockade of the Strait of Hormuz due to U.S.-Iran military tensions, soaring demand for copper driven by the expansion of AI data centers, and a concerted effort by central banks to accumulate gold as a hedge against the dollar's volatility. The International Monetary Fund (IMF) has recently raised its global inflation forecast for 2026 to 4.7%, highlighting the urgency of the situation.
On September 10, 2026, the European Central Bank (ECB) is expected to raise its benchmark interest rate from 2.25% to 2.50%, marking its second rate hike this year. This decision comes in response to rising energy prices that have been exacerbated by renewed military clashes between the U.S. and Iran, which have disrupted shipping and energy facilities. As a result, inflation fears have resurfaced in the eurozone, where energy imports are a major concern.
The CRB Index, which reflects the price movements of 19 key global commodities, has reached levels not seen since before the Lehman Brothers collapse, with experts warning that the current situation is a complex crisis fueled by three structural factors. The closure of the Strait of Hormuz, responsible for 20% of global oil shipments, has led to a more than 30% increase in international oil prices since the onset of military actions between the U.S. and Iran. Meanwhile, the price of copper has hit a seven-month high, driven by explosive demand from the AI computing infrastructure and the electric vehicle sector, as noted by Kazutomo Nomura, a director at Mizuho Bank.
Central banks worldwide have been aggressively increasing their gold reserves since 2022, responding to fears of fiscal instability and geopolitical asset freezes. Nicholas Freppel, the global head of institutions at Australia's ABC Oil, pointed out that gold prices have surged fivefold from their 2008 lows due to soaring public debt and a diversification of central bank portfolios. Koichi Fujishiro, chief economist at Dai-ichi Life Research Institute, emphasized that the combination of supply disruptions from Middle Eastern conflicts, structural demand from AI infrastructure, and a growing aversion to the dollar are driving prices across various commodities.
Unlike previous commodity crises, the current rally is characterized by broad-based price increases across all categories rather than being driven solely by oil or specific commodities. Dan Struyven, co-head of global commodities research at Goldman Sachs, highlighted that the CRB Index is nearing record highs even though oil prices have not surpassed previous peaks. This suggests that non-energy commodities, such as copper, gold, and grains, are significantly contributing to the index's rise.
The implications of rising commodity prices are far-reaching, particularly for major economies that heavily rely on energy imports, such as South Korea and Japan. Tsuyoshi Ueno, a senior economist at NLI Research Institute, warned that the prolonged depreciation of currencies, combined with skyrocketing dollar-denominated commodity prices, could lead to severe stagflation, characterized by declining real incomes for households and deteriorating profitability for manufacturers.
As inflationary pressures mount, central banks are faced with difficult policy decisions. The IMF's upward revision of global inflation forecasts signals an end to the disinflationary trends that had been observed since early 2024. This complicates the Federal Reserve's plans for interest rate cuts, especially under pressure from former President Donald Trump, who has been advocating for aggressive rate reductions to stimulate the economy.
In the eurozone, the ECB's anticipated interest rate hike reflects its commitment to addressing inflation concerns. Financial market analysts predict that if inflation does not improve, additional tightening measures may be necessary in the coming months. The ECB is also expected to adjust its growth forecasts for 2026 and 2027 upward, taking into account recent economic resilience.
On September 9, Brent crude oil prices surpassed $100 per barrel once again, intensifying concerns about inflationary impacts on wages and consumer prices. The ECB's upcoming meeting will address monetary policy and the future of ECB President Christine Lagarde, whose term is set to end on October 31, 2027, sparking speculation about her potential role in the World Economic Forum.
The current economic climate, marked by rising commodity prices and inflationary pressures, poses a complex challenge for policymakers worldwide. With central banks caught between the need to stimulate growth and the risk of runaway inflation, the coming months will be decisive in shaping the global economic outlook.