Diplomatic Progress Eases Energy Fears, but Inflation Risks Persist

NatWest’s latest economic update examines the market impact of a preliminary U.S.–Iran agreement and assesses how the recent energy shock continues to influence growth, inflation, and monetary policy expectations.

• Oil prices have fallen sharply on expectations that the Strait of Hormuz will reopen, but businesses continue to report higher costs and weaker confidence following the recent energy shock.
• UK economic activity remains resilient beneath the surface, with positive three-month GDP growth and a rebound in retail sales, although hiring intentions and consumer confidence have softened.
• The ECB has already responded to rising inflation pressures with a rate hike, while attention now shifts to whether the Bank of England and Federal Reserve will follow.

Read the full report for a broader perspective on inflation, consumer behavior, labor markets, and the evolving global policy outlook.