The raging conflict between Israel and Iran in the Middle East dominated the headlines this week, as the United States considered joining Israel's campaign against Iranian nuclear sites.
Despite some efforts to mediate a peaceful resolution, the conflicting parties staunchly defended their positions, despite calls from China, Russia, and other countries to de-escalate. In the meantime, Tehran mulled closing the Strait of Hormuz if the conflict continued to worsen. Such a move could send oil prices rising sharply and affect the global economy. After threatening Iran's supreme leader and demanding the country's unconditional surrender, US President Donald Trump again seemed to deliberate on whether to proceed with a military solution, saying he would make a final decision within two weeks.
In other news, the US Federal Reserve kept the key interest rates unchanged, as expected, wary of inflation and the potential impact of Middle East tensions on the US economy. The move drew sharp criticism from Trump, who blasted Fed Chair Jerome Powell for not lowering rates. Across the Atlantic, the Bank of England also kept rates steady, while the Swiss National Bank cut them to 0.00%. Other economic indicators included inflation in the euro area, US jobs numbers, and China's industry figures, among others.
