Central bank governor warns of rising prices and higher interest rates

The Faroe Islands should prepare for increased inflation and rising interest rates, the governor of the country’s central bank has warned, as oil prices surge following recent geopolitical tensions in the Middle East.

Speaking to public broadcaster Kringvarp Føroya, Malan Johansen, governor of Landsbanki Føroya, said the conflict between the US, Israel, and Iran—including attacks in late February—has driven oil prices up by more than 37%. The spike stems from Iran’s blockade of the Strait of Hormuz, through which about 20% of global oil shipments pass.

“We can expect it to become more expensive to live,” Johansen said, noting that the crisis in the Middle East will have tangible economic effects on the Faroe Islands.

The warning comes as global markets react to disrupted oil supplies, with central banks worldwide facing pressure to adjust monetary policy in response to inflationary pressures.