Home Inflation at 3%: Central Banks’ revised target

GEAB 191

The monthly bulletin of LEAP (European Laboratory of Political Anticipation) - 15 Jan 2025

Inflation at 3%: Central Banks’ revised target

The past few years have been defined by a series of global upheavals that have challenged financial globalisation as we’ve known it. In 2025, these disruptions will reach a critical juncture, compelling central banks to reassess their priorities. As stewards of price stability, they will need to adapt to events that will have lasting inflationary effects.

Firstly, emerging conflicts will further exacerbate international tensions. In the Middle East, the escalation between Israel and Iran will further threaten regional stability and, naturally, oil flows. In Asia, the potential conflict between China and Taiwan[1], as well as possible aggression by North Korea against the South[2], will disrupt technological supply chains. In the South China Sea, military tensions between Japan and China will affect the stability of natural resources, particularly mining. Furthermore, because of its strategic maritime routes and its natural gas and oil resources, East Africa will become a centre of permanent tension, where the world powers will strengthen their presence.

The inevitability of inflation

These geopolitical conflicts will not be without consequences. Disruptions to global supply chains will lead to price rises for many strategic products (notably electric cars, semi-conductors and weapons). Shortages of critical materials such as lithium[3], which are essential for the ecological transition, will also affect the industrial[4] and technology sectors.

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