JPMorgan sees end of goldilocks economy amid Iran war

Tuesday 26 May 2026 - 07:08

By: Dakir Madiha

JPMorgan sees end of goldilocks economy amid Iran war

The global economy is losing the conditions that once defined a “goldilocks” scenario of steady growth and moderate inflation, according to economists at JPMorgan. The bank links this shift to the ongoing war in Iran, which has disrupted energy markets and created a persistent shock across global supply chains. Rising oil prices, which previously surged beyond 100 dollars per barrel, continue to shape the outlook for inflation and growth.

JPMorgan has reduced its global growth forecasts by roughly a quarter of a percentage point. It now expects inflation to remain close to 3 percent globally as higher energy and commodity costs filter through production networks and push up consumer prices. The disruption of flows through strategic routes, including the Strait of Hormuz, has amplified volatility in energy markets and tightened supply conditions for importing economies.

The bank’s assessment aligns with a broader policy debate over the durability of inflation and interest rates. United States monetary authorities are expected to maintain policy rates in the 3.5 to 3.75 percent range through 2026, with limited scope for easing if price pressures persist. The International Monetary Fund has also revised global growth expectations downward, citing energy shocks and supply chain disruptions linked to the conflict.

Other major financial institutions have adopted a similar tone. Forecasts from Wall Street peers point to slower global expansion and rising uncertainty around production costs. Wage growth in some advanced economies is no longer keeping pace with inflation, raising concerns about stagflation conditions where weak growth coincides with sustained price increases. The result is a more fragile global outlook shaped by energy insecurity and uneven economic resilience.