Bloomberg: Prolonged high-rate period looms for global economy

The global economy is likely to face a prolonged period of elevated interest rates as central banks respond to the economic fallout from the US and Israeli war against Iran, Bloomberg reports, citing its latest economic forecasts.

According to Bloomberg Economics' July outlook, the average policy interest rate across the world's major economies is expected to remain elevated at least through 2028.

The report projects the average benchmark rate will stand at 5.10% at the end of 2026, compared with the 4.41% forecast issued in January, before the outbreak of the war in Iran.

By the end of 2027, the rate is expected to ease to 4.50%, remaining 0.75 percentage points above the January projection.

In 2028, the gap is forecast to narrow slightly but remain around 0.50 percentage points.

Bloomberg said the outlook reflects inflationary risks stemming from the energy crisis triggered by the disruption of shipping through the Strait of Hormuz during the war in Iran, as well as the rapid adoption of artificial intelligence technologies.

The Bloomberg Economics forecast covers 23 countries that together account for around 90% of global gross domestic product.

By Bakhtiyar Abbasov