The war in the Middle East may be moving from open escalation toward an uneasy ceasefire, but its economic aftershocks are not fading with the headlines. If anything, they are becoming more deeply embedded in the global policy outlook.

The most immediate market reactions, such as the spike in oil prices, the rush into gold, the jump in shipping and insurance costs, and the repricing of inflation risk, were dramatic but predictable. But what about the long-term consequences?

According to the latest analysis by Bloomberg Economics, central banks may now be forced to keep interest rates higher for longer, marking a significant shift from forecasts made before the escalation in the Middle East.

Bloomberg Economics' July outlook suggests that the average policy interest rate across the world's major economies will remain elevated until at least 2028. The revision represents a notable departure from projections made in January, before military tensions intensified. By the end of 2026, the average benchmark interest rate is now expected to reach 5.10 percent, significantly above the 4.41 percent forecast at the beginning of the year. By the end of 2027, rates are projected to decline modestly to 4.50 percent, yet they will still remain substantially higher than previously anticipated.

These revised forecasts reflect a growing concern among policymakers that inflationary pressures are proving more persistent than expected. While energy prices have retreated from the highs recorded during the conflict, they remain vulnerable to renewed geopolitical disruptions.

The temporary disruption of shipping through the Strait of Hormuz illustrated just how sensitive international markets remain to geopolitical instability. Roughly one-fifth of the world's oil trade passes through this narrow waterway, making it one of the most strategically important maritime corridors in the global economy.

The implications for........

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