A short conflict in Iran would push global inflation temporarily higher and trim GDP growth, but the fallout would be manageable. Central banks that had already begun tightening – such as the BoJ and RBA – would raise rates further, and it is likely that the ECB would also tighten on concerns about inflation expectations. But the Fed and, potentially, the Bank of England may still “look through” the shock and leave rates unchanged. A more prolonged disruption to energy supplies would deliver a much larger hit to activity that would meet most definitions of a global recession and prompt a broader monetary tightening cycle.