What's going on?

Another act of Russian aggression sent ripples through markets on Tuesday, but you know what they say: even Vlad publicity is good publicity.

What does this mean?

The West has been concerned that Russia might invade Ukraine for a few weeks now, and Russia�s decision on Monday to recognize the independence of two separatist Ukrainian regions � and to subsequently install troops in both of them � won�t have done much to help matters. Investors certainly didn�t like it one bit: global stock markets fell at the prospect of all-out war, and the prices of gold and government bonds soared as everyone rushed to buy safe-haven assets. The price of oil shot up by 5%, as the prospect of a disruption to supplies of the slippery elixir took hold. And with Russian sanctions looking more and more likely, the Russian ruble rounded things off by collapsing to a 15-month low.

Why should I care?

For markets: Inflation up, growth down.
Just the news that Russia � the world�s third-biggest oil producer � might be edging closer to an invasion sent the price of oil up to nearly $100 a barrel. That alone could put more pressure on the global economy, but JPMorgan has war-gamed a scenario where we hit $150 a barrel this quarter. If that happens, the investment bank�s forecast for global inflation in the first half of the year would double to 7.2%, and global economic growth would shrink from 4.1% to 0.9%.

The bigger picture: A lose-lose for central banks.
That combination of higher inflation and slowing growth would put central banks in a Catch-22. One of the best weapons in their arsenal to limit inflation is to raise interest rates even quicker than they�d planned, which would slow down borrowing and spending. But they�d also be aware that those same interest rate hikes would, by definition, only make the economic slowdown worse.