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[INTRO: AMINE LAOUEDJ, MANAGING DIRECTOR]
Welcome. Each week from London, we break down the key global economic event that shaped the past seven days, and we analyze what it means for business.
[LAST WEEK'S KEY ECONOMIC EVENT]
Last week, five central banks made the decision to hold their interest rates. The Bank of Japan on Tuesday, the US Federal Reserve and the Bank of Canada on Wednesday, and the European Central Bank and the Bank of England on Thursday.
As a reminder, a central bank sets the base interest rate for its economy. Then, commercial banks pass it on with an added margin to businesses and consumers when they ask for a loan.
Central banks typically use the adjustment of interest rates as a tool to control inflation. When prices rise too fast, they increase rates to make borrowing more expensive which slows demand and reduces inflation. When the economy needs support, they lower rates to make borrowing cheaper which encourages spending and investment.
Now for context, for two years, inflation had been coming down, and all five central banks had been gradually reducing rates. Companies were building their 2026 plans around the expectation that borrowing would keep getting cheaper.
Then, the US and Israeli attack on Iran on 28 February resulted in the restriction of traffic through the Strait of Hormuz. Middle Eastern exports that use that route represent 20% of oil and gas energy and 30% of fertilizers globally. With that route disrupted, a large share of it could no longer reach global markets. Brent crude went from $73 a barrel in January to above $110 last week, briefly hitting $126 on Thursday.
This restriction raised the cost of fuel, shipping, electricity, and manufacturing. Those costs flow through the entire supply chain. And because fertilizers take weeks to months to reach farms and feed into food prices, the full impact on food costs has not yet fully arrived. But this inflation is not from excessive demand but rather from a reduction in supply. So central banks cannot fix the situation by simply increasing the interest rates.
Instead, all five central banks have decided to stop cutting and instead chose to hold interest rates at their current levels.
Here is how it unfolded in each region.
In the US, consumer prices jumped to 4.5% in the first quarter, which is more than double the Fed's 2% target. At the same time, the economy grew at 2%, but that number is misleading because it includes government workers who came back after a federal shutdown and spending linked to the war effort.
So the real picture is weaker than the headline suggests. With inflation too high to justify a cut and growth too fragile to justify a raise, the Fed held its rate at 3.50 to 3.75%. However, the vote revealed serious disagreement inside the committee: four members out of twelve dissented, the highest number since 1992.
One of them wanted to cut rates, but the other three wanted the opposite: they wanted the Fed to remove from its official statement any language suggesting that the next move would be a cut. In other words, three members of the committee believe the Fed should no longer be telling the market that rates are heading down.
On a separate note, Chair Powell is stepping down on 15 May, and the Senate Banking Committee voted to advance Kevin Warsh as his replacement.
In the UK, the Bank of England held at 3.75%, voting 8 to 1. Chief Economist Huw Pill dissented in favor of a raise. The Bank's central scenario projects at least two rate increases over the coming year.
In the eurozone, inflation jumped from 1.9% in February to 3% in April on energy costs up 10.9%, while the economy grew just 0.1%.
When an economy experiences rising prices alongside flat growth, this is called stagflation.
So, the ECB held at 2%, with its President Christine Lagarde not ruling out a rate increase in June.
In Canada, as inflation is expected to reach 3% in April, the Central Bank held at 2.25%.
In Japan, the Central Bank held at 0.75%, but three out of nine board members voted for a raise.
So, across all five economies, the cutting cycle has ended, and the question is no longer when rates will fall, but whether they will have to rise. The Fed is the most divided of the five, with its committee split on whether the next move should even be a cut, while the Bank of England and the ECB are leaning more clearly toward raises.
Important to keep in mind that the longer oil stays above $110, the greater risk that we experience second-round effects.
This is the idea that inflation feeds into wages, rents, and prices of unrelated goods and becomes self-sustaining, even if energy prices go back down. Central banks would then be forced to raise rates into a weakening economy.
We are not there yet, but each week the war continues, that risk grows.
[WHAT IT MEANS FOR BUSINESS]
So, what does this mean for business?
The overall impact is neutral compared to last week in terms of the direction.
These decisions from central banks just confirm what was already in place. What changed is the certainty.
But it is important to understand that while nothing new happened, the damage is cumulative. Each week that oil stays above $110 adds another layer of cost that businesses have to absorb, so the pressure is not flat, it is compounding.
As we covered in previous episodes, the situation remains hardest on energy-intensive operations such as manufacturing, logistics, food production, chemicals, and construction, particularly in the eurozone where growth is closest to zero. Sectors with direct fuel exposure, such as airlines and shipping companies, are hit especially hard because fuel is their single largest cost and they cannot easily substitute it.
In Japan, businesses face a compounding effect because a weaker yen makes oil imports even more expensive.
More broadly, the eurozone and Japan import almost all of their energy, which means they absorb the full cost with no offsetting benefit.
On the winning side, we still have energy producers outside the Gulf who benefit from higher prices.
The US and Canada are partly buffered because both are major oil and gas producers. Canada is the world's fourth-largest oil producer and a net energy exporter, which means its energy sector benefits from higher prices even as its consumers and manufacturers pay more.
We also have businesses that locked in fixed-rate debt before the cycle turned. And we have businesses with strong pricing power who can pass through higher costs.
[WHAT SHOULD BUSINESS LEADERS DO NOW]
So, what to do now?
The advice is the same as in previous weeks, because the situation has not changed.
But if you have not acted yet, the window is narrowing.
If you are on the losing side, meaning your costs are rising faster than you can raise your prices, focus on protecting your cash.
Also, lock in energy supply at fixed prices, stress-test your cash flow against borrowing costs that stay flat or rise, defer capital spending built on the assumption of cheaper financing, and collect faster from customers while extending payment terms with suppliers.
If you are on the winning side, with pricing power, low leverage, or energy exposure in your favor, move while your competitors cannot. They are pulling back because their margins are under pressure, which means capacity, talent, and corporate acquisitions secured now all compound when the cycle turns.
[OUTRO: AMINE LAOUEDJ, MANAGING DIRECTOR]
Thank you for listening to this episode of What It Means for Business. Have a good week.
Last week, five central banks announced their decisions to hold interest rates. The Bank of Japan, the US Federal Reserve, the Bank of Canada, the European Central Bank, and the Bank of England all chose to stop cutting rates as disruptions in the Strait of Hormuz push oil prices above $110 a barrel, with a temporary high of $126. The global expectation for cheaper borrowing costs has vanished. All five are now facing the same challenge: inflation driven by a supply shock they cannot fix, in economies too fragile to absorb a rate increase.
Every week on the What It Means for Business podcast, Glenshore's Amine Laouedj cuts through the noise of global economic headlines to explain what is happening, why it matters, and what business leaders should do about it to adapt.
Date of production: 5 May 2026
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