At the beginning of the war in Iran and the current oil crisis, warnings from the International Energy Agency about the scale of the energy shock were initially regarded by the global public as exaggerated. This was especially true of comparisons suggesting that the strength of this oil shock was on a par with the combined impact of similar shocks during the 1970s and 1980s, as well as during the global economic crisis.

Today, however, such warnings appear objective. The agency is now announcing that the oil market could enter the “red zone” during July and August, at the peak of the summer season.

Only two weeks ago, the world’s leading banks were convinced that the years of high interest rates were behind us. They believed that in 2026, despite disruptions fuelling inflationary expectations, there would be no need for further monetary tightening. They may already have abandoned plans for additional cuts to benchmark interest rates, but they still hoped they would not have to raise them again.

Today, however, there has been a reversal there as well. The new head of the US Federal Reserve, Kevin Warsh, will in all likelihood soon have to choose between Trump and inflation. In Europe, there are no longer any such dilemmas. Isabel Schnabel, a member of the Executive Board of the European Central Bank, stated two days ago that “ignoring the shock is no longer an option”. In other words, the ECB can no longer remain a passive observer and may raise interest rates as early as June.

The reasons are, of course, rising inflation and the prolonged energy shock caused by the crisis in the Middle East and the related increase in energy prices.

Forbes Serbia spoke with economists about the consequences of the current situation and the new inflationary wave threatening to hit the world before the effects of the previous one have even been repaired.

What Europe will do?

Schnabel warns that inflation in the eurozone has already reached 3 per cent and that markets expect it to continue rising.

That is precisely why, she explains, interest rates must increase in order to calm inflationary expectations and thereby halt rising inflation. As things currently stand, hopes that the war could soon be stopped and that its effects on markets and prices could quickly be repaired are slowly fading.

Milojko Arsić, professor at the Faculty of Economics in Belgrade, told Forbes Serbia that because of high energy prices and their spillover into other prices, an ECB interest rate increase as early as June is more than likely. “Raising interest rates will prevent the further spread of inflationary expectations and increases in the prices of other products. The currently high energy prices are affecting both inflationary expectations and secondary effects,” Arsić said.

He explained that businesses, expecting higher inflation, increase prices in advance in order to avoid losses. This then creates a spiral of inflationary expectations, and interest rates are there to contain it. Arsić added that rising inflation further increases pressure on wages, creating an inflationary spiral that needs to be avoided.

Asked whether the world is facing a new wave of inflation, Arsić replied: “It is difficult to say that with certainty. If this situation lasts for another one or two quarters, the prospects become more realistic. Everything will, of course, depend on the reactions of monetary and fiscal policy. If inflation continues to rise, a swift reaction from monetary authorities will be needed. On the other hand, a more restrictive fiscal policy is also necessary so that it does not fuel inflation,” Arsić explained.

Warsh caught between Trump and inflation

The tightening of monetary policy will, as expected, have negative consequences for economic growth, lending activity and the wider economy, affecting both businesses and households.

And that is precisely what will trouble the new head of the Fed, Kevin Warsh, in the coming period. Trump’s preferred candidate, who replaced the conservative Jerome Powell, will have to turn his back on the wishes of the American president if he wants to preserve the credibility of the central bank and curb inflation. Instead of the interest rate cuts Trump wants, the opposite will happen.

“Every new statement by Donald Trump regarding the war in Iran triggers reactions on the financial markets. It is obvious that inflation is a more persistent phenomenon than previously thought. It is clear that the energy shock cannot be absorbed so quickly, just as inflationary expectations cannot easily be repaired. That is why monetary authorities are now faced with the question of what to do in this situation,” said Đorđe Đukić, monetary expert and professor at the Faculty of Economics in Belgrade.

What awaits Serbia?

The National Bank of Serbia has kept its benchmark interest rate at 5.75 per cent. According to data from the Statistical Office of the Republic of Serbia, annual inflation rose in April from 2.8 to 3.3 per cent.

Milojko Arsić says that Serbia’s benchmark interest rate is still at a high level and therefore does not expect it to be increased any time soon. “In our case, inflation is also under control because state policy measures are being implemented, such as reduced excise duties, capped fuel prices and interventions from reserves on the fuel market. But all of that has a limited effect. Future price movements will depend on the response of both the National Bank of Serbia and the Government, that is, on both monetary and fiscal policy,” Arsić said.

He also stated that the National Bank of Serbia should raise interest rates if inflation starts to increase, while fiscal policy should avoid fuelling consumption.

However, in a year marked not only by elections but also by additional risks of increased public spending, this is difficult to expect. On the contrary, it is more logical that spending will continue to rise.

(Forbes Serbia, 28.05.2026)

https://forbes.n1info.rs/novac/istrazujemo-sve-blizi-novi-inflatorni-talas-cenu-energetskog-soka-tek-cemo-placati/