Every atomic assertion extracted from the underlying record, ranked by evidence strength.
The US is impacted by the bottleneck in the Strait of Hormuz but substantially less than most other developed economies.
Nomura has raised its 2026 HICP inflation forecast for the euro area by 0.6% to average 2.7% this year.
A second rationale for the European Central Bank to raise rates is an insurance hike to prevent inflation expectations from de-anchoring.
Nomura now expects core CPI (all items excluding fresh food) for Japan in FY2026 to come in at 2.6% year-on-year.
Nomura does not expect rate hikes next week from the central banks in Indonesia, Taiwan, or Australia.
Fresh headlines are coming thick and fast, setting a tricky backdrop for central banks meeting next week.
A key uncertainty for central banks is the unknown duration of the Middle East conflict.
The Iran situation remains extremely fluid, with a lot of uncertainty over the administration's objectives.
President Donald Trump appears to be looking for an off-ramp for the conflict and a potential way to de-escalate.
It is not clear that the Iranian side is prepared to step down their provocations in the region.
The US is a net energy exporter with ample domestic supply of crude and sufficient domestic refining capacity.
The US does not depend on barrels from the Middle East.
The price of oil will still be a headwind for US consumers.
A long-lived increase in energy prices actually has a positive offset in the US by incentivizing domestic production and investment.
US shale drilling has a relatively fast investment cycle and can be a reactive source of global supply to price increases.
The US is relatively insulated from global gas markets due to ample domestic natural gas supplies and little interconnectedness with the rest of the world.
About 15 billion cubic feet per day of export capacity exists through LNG, but this is a small fraction of the US market.
Most US natural gas production remains captive domestically, limiting pressure on residential natural gas prices and electricity prices.
Incentives for more shale oil drilling create more domestic gas supply as a byproduct.
A rising share of US natural gas is produced associated with oil drilling.
There will be some headline inflation impact in the US from additional supply pressures in fertilizer or metals.
Unlike other economies, US consumers and businesses are relatively well insulated from acute price pressures from Middle East supply.
The decision for the Federal Reserve to stay on hold has been well telegraphed.
There are likely to be a handful of dissents from dovish governors at the upcoming FOMC meeting.
The majority of FOMC voters think policy is in a good place.
Recent data shows a return to a stagflationary narrative, with risks to both sides of the Federal Reserve's mandate.
The disappointment in the February NFP report will bring labor market concerns back to the forefront.
It is getting harder to ignore signs of lingering inflation pressure.
The CPI report for February was relatively mild on headline and core numbers.
Details of the CPI report suggest another very strong core PCE reading in February.
Nomura expects a third consecutive 0.4% month-on-month increase for core PCE.
Global memory shortages are increasingly pushing up prices of consumer electronics.
There are risks that global memory shortages can impact the auto sector.
An earlier rise in commodity prices, particularly industrial metals, through late 2025 and early 2026, can pass through into goods prices.
The Federal Reserve will be very cautious about building inflationary pressure.
The Federal Reserve will retain its easing bias for now and hold serve on policy communications.
The Federal Reserve will increasingly acknowledge two-sided risks and insist they are prepared to act as needed.
Europe's economy is significantly impacted by the Iran oil uncertainty, unlike the US.
There is a high contemporaneous correlation between Brent spot prices and the fuels and lubricants component of inflation.
The weight of the fuels and lubricants component in the inflation basket is about 4%.
Large swings driven by volatile changes in crude oil prices can markedly add to headline inflation.
In March 2022, Brent crude oil rose by about 21% month-on-month.
The fuels and lubricants component rose by about 16% month-on-month in March 2022.
This contributed about 0.6 percentage points to headline HICP for March 2022.
Nomura thinks March 2026 inflation for Europe will be heavily impacted by the rise in crude oil prices.
March 2026 HICP could be about 0.4 to 0.6 percentage points higher relative to the baseline prior to the conflict.
The pass-through of crude oil price changes to fuels and lubricants is slightly less in the UK due to tax acting as a buffer.
The European Central Bank's interpretation of recent developments depends on the persistence of recent moves and the realization of futures curves.
If the conflict endures for much longer, the European Central Bank might get anxious.
Nomura expects no change in European Central Bank policy at the upcoming March meeting.
The key focus for the European Central Bank will be on scenario analysis and sensitivity analysis for inflation and growth under different oil and gas futures assumptions.
Markets are currently pricing rate hikes for the European Central Bank for this year and next year.
There is a risk that the European Central Bank could raise rates this year in response to the Iran conflict if it endures.
One rationale for the European Central Bank to raise rates is if the medium-term view on inflation changes due to a prolonged conflict.
The June meeting would be the earliest point for the European Central Bank to consider an insurance rate hike.
The Bank of England is also very concerned about the Iran conflict's impact on medium-term inflation.
The Bank of England was in its cutting phase prior to the conflict, unlike the European Central Bank which has rates at neutral.
Nomura had expected a March rate cut from the Bank of England but has pushed it back to April.
Recent market volatility and uncertainty will make the Bank of England cautious.
Japan is an oil importer, making it vulnerable to global oil price developments.