Global inflation is proving more persistent than economists expected, raising the risk that central banks will have to maintain restrictive monetary policy even as economic growth remains resilient.
More than 500 economists surveyed by Reuters in October raised their 2027 inflation forecasts for 31 of the 50 economies covered. Forecasts increased for 15 of 21 developed economies, showing that renewed price pressure is spreading beyond countries traditionally considered more inflation-prone. (Reuters)
Energy remains a major source of pressure. Crude oil has stayed above $100 a barrel since October 7 and exceeded $117 last week, with prices more than 60% higher since the U.S.-Israeli conflict with Iran began nearly eight months ago.
The concern is increasingly broader than energy itself.
Economists are seeing evidence that higher energy costs are feeding into wider price measures while strong investment in artificial intelligence and resilient economic activity support demand.
The shift is visible across major economies. Median 2027 inflation forecasts have risen by 0.7 percentage points for Britain over the past three quarterly Reuters polls, 0.5 percentage points for the euro zone, 0.5 percentage points for Brazil and 0.4 percentage points for India. The cumulative increase for the United States has been smaller at 0.2 percentage points. (Reuters)
At the same time, the global economy has performed better than previously expected.
Economists raised their global growth forecasts to 3.0% for 2026 and 3.2% for 2027, from 2.9% and 3.1%, respectively, in the July survey. U.S. growth is projected at 2.3% this year and 2.1% in 2027.
That combination matters for financial markets because persistent inflation alongside resilient growth gives central banks less reason to quickly reverse restrictive policy.
Bond markets are already transmitting some of that pressure through higher yields.
The central question for investors is whether inflation remains primarily an energy shock or becomes sufficiently broad and persistent to force another round of monetary tightening.
If price pressures continue spreading into core inflation while growth remains resilient, expectations for easier monetary policy could be pushed further into the future. (Reuters)
