Day: 11 March 2026

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U.S. Inflation Cools to 2.4% — Just as a New Oil Shock Looms

U.S. inflation at 2.4%

U.S. inflation eased to 2.4% in February, offering the Federal Reserve a rare moment of calm after two years of stubborn price pressures.

The latest CPI report showed a steady 0.3% monthly rise, perfectly in line with expectations, while core inflation held at 2.5%.

It’s the clearest sign yet that the disinflation trend remains intact, even if the final stretch back to the Fed’s 2% target is proving slow and uneven.

Yet the relief may be short‑lived. The escalating confrontation involving the United States, Israel and Iran is already unsettling global energy markets.

With shipping lanes in the Strait of Hormuz repeatedly disrupted and tankers struck near Iran’s coastline, traders are bracing for a renewed inflationary oil shock.

Any sustained rise in crude prices would feed quickly into petrol costs, transport services and eventually the broader CPI basket.

For now, policymakers can point to progress: inflation is no longer accelerating, and the worst of the pandemic‑era distortions have faded.

But the geopolitical backdrop threatens to re‑ignite the very pressures the Fed has spent years trying to extinguish.

February’s cooling may prove to be the calm before a far more volatile spring.

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UK Mortgage Market Faces Turmoil as Iran Conflict Drives Interest Rates Up

The UK mortgage market has been thrown back into a state of turbulence not seen since the aftermath of the 2022 mini‑Budget, as lenders scramble to reprice deals in response to global instability triggered by the U.S. Israel war with Iran.

Average rates on two‑year fixed mortgages have now climbed above 5%, reaching their highest level since last August, according to data from Moneyfacts. Five‑year fixes have also risen, marking their most expensive point since mid‑2024.

Little or no warning

The sudden shift has caught borrowers off guard. Nearly 500 mortgage products have been withdrawn in just 48 hours, the steepest contraction in available deals since the Truss–Kwarteng fiscal shock.

Lenders are reacting to sharp movements in gilt yields, which have become increasingly volatile as markets reassess the likelihood of Bank of England rate cuts this year.

Before the conflict erupted, investors had broadly expected the Bank to begin easing borrowing costs. That optimism evaporated as oil prices surged, raising the prospect of renewed inflationary pressure.

With Brent crude still more than 20% higher than before the war and reaching over 40% increase at one stage, expectations of cheaper mortgages have been replaced by fears of a prolonged period of elevated rates.

Timing

For homeowners approaching the end of a fixed deal, the timing is particularly painful. The average two‑year fix has jumped from 4.84% to 5.01% in less than four days, while five‑year rates have risen from 4.96% to 5.09%.

First‑time buyers, already squeezed by high prices and stagnant supply, face a shrinking pool of products and rising monthly costs.

The wider cost‑of‑living picture is also darkening. Petrol and diesel prices continue to climb as Middle East supply disruptions ripple through global energy markets.

With inflation risks resurfacing, the path for mortgage rates now hinges on how the conflict evolves — and whether markets can regain their footing.

Fuel up, energy costs up and mortgage rates up – all in just a weekend – that didn’t take long.