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Pakistan Attacks Iran, Tensions Soar

POLITICSPakistan Attacks Iran, Tensions Soar

In recent times, there is an increasing number of armed conflicts occurring worldwide. Almost every event is interpreted by analysts as the potential start of a new conflict. The current situation between Iran and Pakistan, whose already strained relations have become even worse, is no exception.

According to reports from AFP agency, the Pakistani army attacked targets labelled as terrorist groups overnight. While this might seem ordinary, it was a bomb attack conducted on Iranian soil. This further aggravates the already tense situation between both nations. Iran has also carried out actions within Pakistan. The Ministry of Foreign Affairs has evidently stated its respect for Iran’s territorial sovereignty, but in the face of bombing targets in the region, the actual meaning of this statement remains unclear. As a diplomatic move, the Pakistani ambassador in Iran has been withdrawn, and the Iranian equivalent was banned from entering Pakistan. Currently, this standoff seems to be a serious political stalemate, with religious differences between the two countries, which represent different branches of Islam, often playing a part in escalating conflicts.

A significant number of countries have witnessed a situation where, after large declines in the level of inflation, we have seen a boomerang effect. The extent of the rebound can be best seen in the summary Consumer Inflation Index in the Eurozone. The index currently stands at 2.9%, compared to 2.4% a month ago, which fits perfectly with expectations. This postpones cuts in interest rates, which, in turn, should theoretically impact favorably on the euro. However, this is not reflected in the chart following the data, as eurozone inflation at the time of publication is known with rounding accuracy only, due to partial data.

Yesterday’s data about the pace of price increases did not bring any joy to the Brits. Inflation was forecasted to fall below 5% for the first time since January 2022 but, as can be deduced from the above paragraph, it did not. It remained at 5.1%. On the other hand, we have producer inflation, which is indeed slowing down. Analysts had expected an increase of 0.4% compared to last year, but the actual increase turned out to be a mere 0.1%. We are therefore close to returning to the situation a month ago, where producer prices were genuinely falling, not just increasing at a slower pace.

Today, in the economic data calendar, it’s worth paying attention to:

– Eurozone: 13:30 – EBC meeting protocol.
– USA: 14:30 – Unemployment benefit applications.
– USA: 14:30 – Home construction.

Maciej Przygórzewski – Chief analyst at and

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