The OECD, which accurately forecast 4.2% U.S. inflation months before the Federal Reserve, now warns that a prolonged Middle East conflict could keep inflation above 4% through 2027. In its June Economic Outlook, the OECD outlines two scenarios: a time-limited disruption with 2026 inflation at 3.7% and GDP growth of 2%, and a prolonged disruption with inflation rising to 4.1% in 2026 and 4.2% in 2027, while GDP growth slumps to 1.4% and 0.6% respectively. The report notes that the conflict has become the dominant force on the global economy, and the prolonged scenario would likely delay Fed rate cuts until at least 2027, negatively impacting the S&P 500. Investors are advised to monitor Middle East developments and consider investments suited for a lower-growth environment, though market timing is discouraged.