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1. Bank of America's Warning: Central Banks May Abandon the "Look-Through" Approach

Bank of America (BofA) Global Research issued a report (July 25, 2026) warning that persistent oil price volatility — driven by global shipping disruptions and geopolitical friction — is threatening to entrench core inflation. This creates a severe dilemma for major central banks: standard monetary policy tools may be insufficient, and prolonged energy-driven inflation could force central banks to abandon their traditional "look-through" approach to energy shocks .

• The core mechanism: BofA argues that when energy price spikes persist long enough, they bleed into core inflation (wages, services, non-energy goods), negating the rationale for looking through them as "temporary" supply shocks .
• Earlier (March 2026) nuance: In a separate Bloomberg report, BofA also cautioned that markets were misreading the Fed's likely response — warning that supply shocks can sometimes lead to stable rates or even cuts, not automatic hikes . This shows BofA's view evolved as the shock persisted.
• "Mild stagflation" scenario: By April 1, 2026, BofA had revised its forecasts to a "mild stagflation" outcome — slower growth, higher inflation, and oil at ~$100/bbl for the rest of the year due to the Iran conflict disrupting the Strait of Hormuz .

2. Thailand's Oil Forecast

Thailand's Fiscal Policy Office (FPO) on July 25, 2026, lowered its 2026 Dubai crude forecast to $82/barrel, down from a previous estimate of $91, citing easing supply risks likely to pull prices lower from Q4 2026 .

• The Bank of Thailand (Monetary Policy Forum, July 14, 2026) projected Dubai crude would peak in Q2/2026 then gradually decline, though year-end prices remain above pre-war levels. Under the base case, the conflict eases by H1/2026 .
• Earlier in 2026, Thai inflation hit a 38-month high in May due to surging energy costs and transport fares . The government's planning agency forecast two inflation scenarios for 2026: 1.5–2.5% (if oil spikes then falls) .
• PTT (Thai state oil firm) said in April that oil prices could gradually decline in Q3/2026 if the Middle East conflict eases, but cautioned any fall would not be immediate .

3. Asian Development Bank (ADB) Growth Outlook

The ADB has cut its forecasts twice this year as the energy crisis deepened:

• July 2026 Outlook: ADB lowered developing Asia-Pacific growth to 4.9% for 2026 (down from 5.1% in April and 5.5% in 2025). Regional inflation is now forecast at 4.3% for 2026 .
• Thailand specifically: The ADB's April 2026 country report forecast Thailand's GDP growth to slow further in 2026 before improving in 2027, reflecting softer global demand and rising energy prices . An ADB social media post from July 12, 2026, put Thailand's 2026 growth at 1.8% (though this is an unofficial source) .
• The driver: The Middle East conflict has led to prolonged disruption of energy and supply chains, raising production costs and dampening domestic demand across the region .

4. Broader Implications for Inflation, Monetary Policy, and Central Bank Responses

• The "look-through" doctrine under strain: The Bank for International Settlements (BIS) — the umbrella body for global central banks — explicitly urged central banks in March 2026 to not overreact to the energy price spike, labeling it a "classic instance" of when to look through a shock . BofA's July warning directly challenges this stance, arguing that the shock has persisted too long to be looked through.
• G4 central bank repricing: In the March 2026 "G4 central bank week," rate futures markets priced in a hawkish shift, though no central bank (Fed, ECB, BOJ) actually raised rates at that meeting . The DBS analysis noted the oil shock "complicates the Fed's inflation battle" .
• Stagflation risk: Multiple forecasts now point to a combination of slower growth and higher inflation across Asia and globally — the classic stagflationary pattern that is the most difficult environment for monetary policy, as raising rates to curb inflation further depresses growth.
• Diverging oil price views: There is a wide spread in forecasts. BofA sees $100/bbl sustained , J.P. Morgan expects Brent averaging only ~$60/bbl in 2026 based on soft fundamentals , and the EIA (U.S. government) assumes the Strait of Hormuz remains mostly closed in its STEO but notes Brent fell in May on demand weakness and potential U.S.-Iran talks . This divergence itself reflects extreme uncertainty.
• Key risk: If oil remains elevated into late 2026, central banks in energy-importing economies (especially in emerging Asia including Thailand) face the hardest trade-off: tighten into slowing growth or accept above-target inflation.