We are now moving into the 2nd quarter of 2026. This quarter started with an escalating conflict between Israel and Iran, punctuated by the closure of the Strait of Hormuz in March 2026 and triggering a severe “supply-side shock.” This has effectively ended the era of cheap credit and forced global central banks to pivot from planned rate cuts to a defensive, hawkish stance. The Federal Reserve on 18 March 2026 has held interest rates steady at the range from 3.50% to 3.75% and projected higher inflation, steady unemployment and a single reduction in borrowing costs this year, a path that US Federal Reserve chair Jerome Powell said was subject to unusually high uncertainty as policymakers take stock of the impact of the US and Israeli war with Iran. Website: US Fed leaves interest rates unchanged, expects inflation to rise The convergence of geopolitical instability and structural logistics failures suggests that the long term “neutral” interest rate has been fundamentally recalibrated upward....