The offensive led by the United States and Israel against Iran has also affected the financial markets. All equity markets recorded valuation losses of 2–4% in the days following the attack, while gold and oil prices increased. Prior to this, developments in February were still dominated by the AI revolution and its implications, particularly for software‑based business models, which led to significantly lower valuations of these companies. All of this is occurring against the backdrop of slightly improving economic indicators.
This video was recorded on 4 March 2026.
Economic growth: Still fragile, with improving industrial sentiment
Growth figures for the fourth quarter fell short of expectations in major economies. The United States, in particular, lost considerable momentum after a strong third quarter and now records growth of only 0.4 per cent. In addition, the sharply revised down labour market data for 2025 are fuelling further economic concerns.
Leading sentiment indicators, however, show a slight easing for the global economy. Industrial activity in Europe and Japan is sending, for the first time in quite a while, signals of increasing business activity. Industrial sentiment in the United States has also improved noticeably.
Overall, the global economic situation remains fragile. Moreover, a prolonged conflict in Iran would particularly affect economies in Asia, which have significantly supported global economic growth in recent years.
Inflation: Some relief from Japan
In industrialised nations, inflation dynamics have weakened significantly in recent months. Core inflation – which excludes the volatile energy and food components – has fallen to its lowest level in more than four years in the United States, the eurozone and the United Kingdom. In January, it fell to 2.5 per cent in the United States, 2.2 per cent in the eurozone and 3.1 per cent in the United Kingdom. This brings the United States and the eurozone closer to their monetary policy targets, while the United Kingdom remains clearly above them.
The most pronounced easing can be observed in Japan: core inflation fell by 0.3 percentage points to 2.6 per cent, and headline inflation dropped by 0.6 percentage points to 1.5 per cent. For Japanese policymakers, this is a welcome development, as raising interest rates to combat inflation would have posed considerable risks for the financial system.
Switzerland remains at a very low level, with core inflation steady at 0.5 per cent. This continues to make Switzerland an exception in an international comparison in terms of price stability.
Due to the ongoing conflict in Iran, energy prices are rising sharply, and consumers in many countries feel the impact quickly, for example at the petrol station. This is likely to cause inflation rates to rise again.
Monetary policy: Central bank balance sheets continue to grow
The balance sheets of central banks remain at elevated levels. At the end of February, the US Federal Reserve reported assets of around USD 6.6 trillion, slightly higher than in the previous month. The European Central Bank also recorded a moderate increase in its balance sheet.
In Switzerland, the situation is particularly pronounced. With CHF 894 billion, the Swiss National Bank’s balance sheet is roughly equivalent to the country’s annual GDP. Relative to economic output, Switzerland has the highest central bank balance sheet internationally. This high ratio reflects repeated foreign exchange market interventions aimed at limiting upward pressure on the Swiss franc.
Given the ongoing geopolitical uncertainties linked to the Iran conflict, this upward pressure is likely to persist. This increases the probability of renewed interventions and consequently the risk of a further expansion of the balance sheet. The phase of high central bank liquidity is therefore likely to continue for the time being. As mentioned above, central banks will naturally monitor inflation developments closely and factor the rising energy prices into their monetary policy decisions.
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