JPMorgan: Central Banks to Hold Rates After US-Iran Deal

JPMorgan Asset Management expects major central banks to hold interest rates steady following the interim agreement between the US and Iran to end hostilities and reopen the Strait of Hormuz.

The deal, announced earlier this week, removes a key geopolitical risk that had kept oil prices elevated and inflation expectations uncertain. Karen Ward, EMEA chief market strategist at JPMorgan Asset Management, said on Bloomberg Television that the agreement reduces the need for central banks to tighten policy further to combat supply-driven inflation. With the Strait of Hormuz reopened, oil supply disruptions are less likely, easing a major source of cost-push inflation that had complicated monetary policy decisions. For equity markets, this shift in the inflation outlook could support valuations by reducing the risk of aggressive rate hikes. Lower oil prices also benefit sectors sensitive to energy costs, such as airlines and industrials. Traders can monitor current pricing on NowPrice's stocks page for real-time sector movements.

Looking ahead, markets will focus on central bank meetings in the coming weeks, particularly the Federal Reserve and the European Central Bank. The reduced geopolitical premium in oil may allow policymakers to signal a pause or end to tightening cycles. Key data releases, including US inflation and employment figures, will be critical in confirming whether the disinflationary trend is sustained. Investors should also watch for any further developments in US-Iran relations that could affect the durability of the agreement.