International Monetary Fund chief economist Pierre-Olivier Gourinchas warned that a prolonged Middle East conflict could force central banks to impose much tighter policies to contain inflation. He said weaker economic conditions mean curbing price pressures may require more severe and painful measures than in the post-pandemic period.

Long Iran war may require painful central bank tightening, IMF chief economist says

April 14, 2026

David Lawder/Reuters

FILE PHOTO: International Monetary Fund chief economist Pierre-Olivier Gourinchas attends the “World Economic Outlook” press briefing at the IMF/World Bank 2025 Annual Meetings in Washington, D.C., U.S., October 14, 2025.

Elizabeth Frantz/Reuters

Central banks may need to inflict much more economic pain to control inflation fueled by a long Middle East war than they did to control the spike in prices after the pandemic, the International Monetary Fund's chief economist said.

When Russia's invasion of Ukraine in 2022 drove oil prices above $100 a barrel, an already overheated post-COVID economy meant small increases in interest rates went a long way to cool demand, IMF Chief Economist Pierre-Olivier Gourinchas said in an interview on Tuesday.

But with much more slack in today's economy, including a weaker labor market and ample supplies of most goods and services, much stronger monetary tightening may be needed, particularly if inflation expectations become unanchored, Gourinchas said.

"Stepping on the brakes will be painful" in such an environment, Gourinchas said as IMF and World Bank spring meetings got under way in Washington.

"You may have to inflict a lot more pain to get the same disinflation result."

However, it's far from clear how hard central banks may need to push back against the effects of rising prices for oil, gas and other commodities considering the uncertainty over how the conflict will develop.

The IMF on Tuesday cut its 2026 global growth outlook to 3.1%, down 0.2 percentage points from January, based on the assumption the war will be short-lived and oil will average $82 per barrel this year.

In the institution's "adverse scenario" of a longer conflict and oil prices averaging $100, growth slows to 2.5%.

Its "severe scenario" envisions an extended conflict, with oil prices averaging $110 in 2026 and $125 in 2027. Growth drops to 2.0% this year, which the IMF sees as the brink of a global recession.

The main concern in such an environment is that inflation expectations could become unanchored, Gourinchas said, adding that 2022's inflation shock had made people hypersensitive to prices.

Companies would raise prices more readily, and workers would be quicker to seek higher pay, he said.

"Once we get into that world, people are going to look at this and say, inflation is here and it's here to stay."

-Reporting by David Lawder; Editing by Kevin Buckland/Reuters