Central bankers, politicians warn of global risks as Iran war drags on
A man walks among buildings destroyed in a joint attack by Israel and the United States on April 6, 2026 in Tehran, Iran.
Majid Saeedi | Getty Images
Policymakers around the world are closely monitoring developments in the Middle East as they gauge the most cautious response to the economic consequences of the war.
CNBC spoke with more than 30 central bankers, politicians and policymakers at IMF World Bank meetings in Washington, D.C. this week to weigh in on the U.S.-Iran war and their biggest economic concerns.
The interviews came before Iran announced on Friday that the Strait of Hormuz was fully open to commercial traffic during a ceasefire between Israel and Lebanon.
US President Donald Trump thanked Iran on Friday for opening the strait. social media post. However, Trump said the US naval blockade of Iranian ports would remain in effect until an agreement was reached with Tehran.
1. A long war
The war in Iran formed the main axis of conversations at the event, in an environment where uncertainty about its course continued.
Trump in one night The war “must end very soon,” he said at an event in Las Vegas.
On April 1, the president said he expected the war to last two to three more weeks. Since then, there have been mixed messages from Washington and Tehran, with little clarity on the status of the peace talks.
“I’m constantly asked, ‘Will this war have much impact? The first answer is that it already has an impact,’ Pierre Gramegna, director general of the European Stability Mechanism, told CNBC’s Karen Tso on the sidelines of IMF World Bank meetings.” “I mean, look at inflation rates in recent months. Look at what’s happening in our gas stations around the world. The impact is obvious.”
Quoting Colombian writer Gabriel García Márquez, Gramegna’s response to the question of whether the war and its impact would continue for a long time was “it is easier to start a war than to end it.”
“To start a war, you don’t need to ask anyone, you are on your own. But to end the war, you need to agree bilaterally, multilaterally, and this uncertainty, of course, affects how we look at the future.”
On Thursday, as the conflict approached its eighth week, Trump said Washington and Tehran were close to a deal.
But policymakers “can’t just bet on the optimal scenario,” Bank of France Governor François Villeroy de Galhau told CNBC.
“There is uncertainty that is unprecedented, even unknown,” he said. “[The war] There may be secondary effects not only on energy but also on some other products. “So in our case, we expect higher inflation and lower growth.”
“We have not yet seen the full realities of this crisis,” Swedish Finance Minister Elisabeth Svantesson said. [and] It could be pretty bad.”
“Of course it depends on the intensity and duration of the war, but it affects people all over the world,” he said. “Everyone is affected in one way or another, so I predict global demand and therefore growth will be lower.”
2. Stagflation
Many who spoke to CNBC cited growth and inflation challenges, with stagflation a major concern.
“If [the war goes on] The impact on inflation over a longer period of time will worry me the most. “If this situation continues for a few more months, if the Strait of Hormuz is closed or semi-closed, then we will see inflation increase by more than 1 percent, perhaps 1.5 percent this year,” said Pierre Gramegna, Director General of the European Stability Mechanism.
“If it gets worse and lasts longer [than that]”Inflation will increase by 2.5 percent, which will likely trigger stagflation, which is bad news for the world.”
3. Energy security
Greek Finance Minister Kyriakos Pierrakakis warned that the world was “potentially looking at the biggest energy crisis in history”.
“And if you add up the other elements, one-third of the fertilizer passes through the Bosphorus.” [of Hormuz] “Sulfur, helium, petrochemicals collectively can pose a huge risk,” Pierrakakis told CNBC’s Tso. “Also, April may be more problematic than March because currently the last ship cargoes departing on February 28 are due to arrive on April 20. So, [supply constraints] “It will be felt more clearly in the markets.”
New Zealand finance minister Nicola Willis warned that a protracted conflict would lead to a “worst-case scenario” of crude oil being stuck in the Middle East and unable to reach refineries in south-east Asia.
“we can [then] “We’re preparing for these kinds of worst-case scenarios, and seeing inflation move out of the target range is something that we should anticipate could happen in the worst-case scenario,” he told CNBC’s Tso.
French Finance Minister Roland Lescure tells CNBC Europe needs to double electricity to build resilience in energy markets.
“We will invest in nuclear energy, we will invest in renewable energy,” he said about France.
“This crisis is manifesting itself once again” [that] “We need to be more independent, we need to be more sovereign,” he said. “We need to rethink climate change as an opportunity, not a threat, and hopefully when the next crisis comes – because I’m afraid there will be more – we will be much more protected than we are today.”
Meanwhile, Krishna Srinivasan, head of the IMF’s Asia department, called on “every country in Asia” to diversify their energy supply chains.
4. ‘Fog’ and ‘cloud’ create policy-making challenges
Policymakers speaking to CNBC in Washington also said it was becoming difficult to move the plan forward due to ongoing uncertainty.
“It is absolutely impossible to predict what will happen, the predictions are quite uncertain,” said Svantesson from Sweden.
Olli Rehn, governor of the Finnish central bank and member of the Governing Council of the European Central Bank, emphasized that ECB policymakers “are not pre-committed to any rate path” even if markets are sluggish. There have been a number of price increases in the euro area this year.
“There is no clarity and certainty about the key factors, [including] “The duration of the conflict,” he said. “It depends largely on negotiations and how serious damage is done to energy production and transportation routes.”
Joachim Nagel, president of the German Bundesbank and another ECB Governing Council member, called the situation “very uncertain, very blurry.”
The ECB will hold its next meeting on monetary policy in two weeks. Nagel said that in the wake of daily news about Iran, policymakers are adopting a “meeting-to-meeting approach.”
“We may see a lot of new things coming in two weeks,” he explained. “So I’m really cautious about giving an accurate indication of what the next steps are that we need to take on the monetary policy side.”
Primoz Dolenc, Governor of the Central Bank of Slovenia and a member of the Governing Council of the European Central Bank, told CNBC that the war “makes it quite difficult to evaluate what monetary policy should do.”
“Accordingly [our] In the base case scenario, we would not need to take a monetary policy stance because we assumed that this supply shock would pass as quickly as it came. “But I don’t know if that scenario is realistic,” he said. “I would say that right now, we still don’t have full information to assess what kind of monetary policy we will have to use.”
5. Market flexibility
Global stock markets largely shrug off impact of Iran war as US stocks tumble New records in Thursday’s session. The MSCI World Ex-US index has fallen about 1% since the start of the war but has recovered more than 8% in the past month.
S&P 500 index
“The markets operated in a fairly orderly manner,” said Verena Ross, head of EU regulator European Securities and Markets Authority. “Market players have been able to meet margin calls and things like that. So there’s been a pretty resilient situation in the way the markets operate. The question is: How will the markets continue to deal with the increasing volatility that’s happening every day?”
Martins Kazaks, another member of the European Central Bank Governing Council and governor of Latvia’s central bank, told CNBC’s Tso that the market’s reaction to the war was unexpected.
“The financial markets, which is surprising to me, are back to where they were before the war started,” he said. “[But] Only now will we see what the impact on supply will be because ships are just arriving and [many] “The ships haven’t sailed yet, so there will be disruption and we’ll see how that affects the real part of the economy.”
