BIS Chief: Iran War Energy Shock Has Moderate Second-Round Inflation Effects So Far

Bank for International Settlements General Manager Pablo Hernandez de Cos said Friday that the surge in energy prices from the Iran war has had moderate second-round inflation effects so far. Speaking at the Istanbul Economic Forum with Turkish Central Bank Governor Fatih Karahan, Hernandez de Cos said the Middle East conflict represents a negative supply shock. Central banks globally have responded at varying speeds, with some reacting quickly where domestic demand conditions justified it and others following more gradually. He said permanent adaptation of analytical tools is necessary and must play an important role in central banks' reaction function. Credibility — underpinned by clear mandates, central bank independence and accountability — remains essential for both monetary policy and financial stability. Macro-prudential and monetary policy objectives are broadly compatible, he said, though trade-offs can emerge and have been managed "in a relatively good way" in the past.