Two weeks of US and Israeli strikes on Iran have left markets jittery, with fuel costs soaring and analysts unable to agree on the conflict’s trajectory. Optimist Peter Navarro expects a drop in Iran’s “terror premium” and lower oil, while Martin Wolf foresees a cease‑fire and Olivier Blanchard warns of prolonged high oil prices. Central banks face their first policy meetings of the week.

Historical precedent offers mixed guidance. The Bundesbank’s aggressive stance in the 1970s helped blunt the oil shock, whereas the ECB’s initial hawkishness in 2011 proved costly before it pivoted. Today, scenario‑analysis units at most central banks regularly model energy shocks, but publishing forecasts—ranging from a brief price dip to a deep, lasting surge—adds little clarity for policymakers.

Policymakers should anchor communication on tools they control. With inflation still above target, Federal Reserve and Bank of England are likely to keep rates steady while warning that any rapid pass‑through of higher fuel costs into wages or corporate pricing will trigger tightening. By stressing readiness to act, they signal that a persistent oil price shock will not be tolerated, preserving market confidence.