Bloomberg Economics says the global monetary-policy outlook has worsened in the aftermath of the U.S. war against Iran, with central banks facing higher-for-longer interest-rate expectations. Even if the conflict’s immediate phase ends, the repercussions for inflation risk and borrowing costs are expected to persist.

The report ties the change in the outlook to lingering price pressures and the compounding effects on cost of living, with elevated loans and mortgages likely to last longer than they otherwise would. Bloomberg Economics’ forecasts for borrowing costs show trajectories raised by roughly half a percentage point or more through 2028 compared with pre-war expectations, across its global gauge for rates.

It also notes that central banks have generally maintained a tougher stance on inflation after the post-pandemic period, meaning even when oil prices later ease, policymakers may be less willing to quickly walk back hawkish rhetoric. At the same time, the article argues the global economy has shown some resilience to higher borrowing costs, though that ability could be tested again by further disruption.

The piece further suggests additional inflation and growth risks—beyond energy shocks—could reinforce tighter financial conditions, including uncertainties around future inflation dynamics and policy responses in multiple economies.