The worst-case scenario for some senior officials is that the sharp rise in commodity prices becomes a breaking point that reveals hidden cracks in the financial system. Mike Dolan*. Central banks around the world are watching the shock of oil prices caused by the war with Iran with vigilant eyes. The old question that has returned to the forefront today is: Do oil shocks, which raise inflation and inflation expectations, lead to the exhaustion of household and corporate budgets to such an extent that it pressures demand and subsequently leads to a decline in prices? Or are we facing the most toxic scenario, where both factors combine: high inflation accompanied by economic slowdown? While inflation is the primary concern for monetary policy makers, it is not the only one.
