The International Monetary Fund just warned that stagflation is coming - rising prices plus slower growth. This is the worst scenario for investors.

The Economic Trap

The Iran war cut global oil supply by 13%. Higher oil prices slow the economy as companies pull back spending. You get the worst of both worlds at once.

IMF Managing Director Kristalina Georgieva was direct: "All roads now lead to higher prices and slower growth." Moody's chief economist Mark Zandi agreed: stagflation is the direction we're heading.

Why Rate Cuts Won't Help

Central banks usually cut rates when growth slows. But they can't now because inflation remains a problem. Energy costs won't drop fast, and rate cuts won't solve that.

The Fed stays stuck holding rates steady while growth weakens. Businesses get squeezed by high costs and weak demand. Consumers face higher bills without relief on borrowing costs.

What to Watch

Trump set an 8pm ET deadline for Iran to reopen the Strait of Hormuz. If it passes without a deal, oil stays tight and stagflation gets worse.

Source: CNBC