Major New Zealand banks have warned that the Iran war will push the country's inflation to 3.6% in the second quarter, exceeding the central bank's 1-3% target range. As a result, investors are now pricing in a possible interest rate hike as early as May. This comes just weeks after the central bank had forecast inflation at 2.3% for the end of the year.

As the Bank of England keeps interest rates unchanged this week, analysts believe the oil price shock from the Iran war has hit a cooling economy, unlike in 2022. With unemployment rising to a five-year high and demand weakening, policymakers face a historic dilemma: tackling inflation or preventing a recession. The experience of 2011 suggests the central bank may refrain from raising rates to avoid deepening the crisis. Markets are now pricing in a rate increase to 4% by December, rather than a cut.

Donald Trump has announced that negotiations with Cuba are underway, but no serious action will be taken regarding the country until the war with Iran is concluded. Simultaneously, with the intensification of U.S. sanctions and the cutoff of fuel supplies to Cuba, sporadic protests have escalated on the island. Cuba has confirmed it is in talks with the U.S. regarding "potential solutions" to bilateral disputes, while simultaneously bolstering its defensive capabilities.

Donald Trump urged other countries to step in to secure the Strait of Hormuz, stressing that the United States alone would not protect the vital waterway. He said he was in talks with about seven countries to help reopen the route, citing China and other countries' dependence on the region's oil. The US president warned that an upcoming summit with Xi Jinping would be postponed if Beijing did not cooperate, and described the future of NATO as "very bad."