Central banks: Watching Gulf fallout, not overreacting – UBS
Ni FXStreet Insights Team
Na-update: 17 Apr 2026
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UBS's Chief Economist Paul Donovan highlights that central banks are focused on second-round effects from Gulf developments rather than immediate policy shifts.
UBS's Chief Economist Paul Donovan highlights that central banks are focused on second-round effects from Gulf developments rather than immediate policy shifts. Bank of England (BoE) Governor Bailey has already moderated his earlier hawkish tone, and Chief Economist Pill is expected to reinforce this stance. European Central Bank (ECB) Chief Economist Lane similarly argues that decisive war effects are not yet visible, delaying any policy signal changes.
BoE and ECB stress second round effects
"Aside from Gulf news, markets have central bankers talking about the consequences of events in the Gulf."
"We have already heard from Bank of England Governor Bailey earlier this week, forced to do penance for an excessively hawkish tone at the last policy meeting."
"Chief Economist Pill should echo the idea that central banks only need focus on second round effects."
"ECB Chief Economist Lane noted that decisive effects from the war are not yet evident."
"It is too soon to expect to see any second round effects, and thus too soon to expect central banks to be signaling change."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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