International Monetary Fund Chief Economist said on Tuesday that a wider conflict between Israel and Iran would likely lead to higher energy prices, which would in turn prompt central banks to tighten monetary policy to control inflation, hurting growth.
Gourinchas told a news conference that an "adverse scenario" in the IMF's World Economic Outlook shows that a 15% increase in global oil prices due to a wider Middle East conflict, along with higher shipping costs to avoid Red Sea attacks, would likely increase global inflation by 0.7 percentage point.