Ukraine could turn boomflation into stagflation

Between the lines: What we do know is that there will be continued and escalating financial sanctions on Russia, damage to Ukraine’s export industries, and high risk of further ripple effects from both physical and cyber-attacks.

All of those amount to a negative supply shock — meaning that the productive capacity of the world economy is simply lower than it was a few weeks ago.

Higher energy prices — already evident in commodity markets — directly feed into higher inflation, but the risks are more sprawling and hard-to-calculate than that implies.

The risk of disruption to Western European energy supplies and transportation networks, and the potential for cyber attacks contributes to the strain on global supply networks that have already been at their breaking point.