The Research Brief
A Weekly Survey of Markets, Policy, & Power
Issue No. 25 · Sunday, the 6th of September, MMXXVI · London
- UK CPI at 2.9% in July, three of nine MPC members already voting to hike, and the August inflation print landing the day before the 17 September decision. Nearly 90% of surveyed economists expect nothing to happen. That is a crowded position.
- The ECB meets Thursday with a second 25bp hike, to 2.50%, close to fully priced — a tightening cycle driven by an oil shock the bank has no instrument to influence.
- US payrolls came in at 162,000 against a 53,000 consensus, with upward revisions that erased July's reported contraction entirely. The September FOMC is now live.
- Crude near $91, up more than 9% on the week. Hormuz throughput is running at roughly a fifth of pre-conflict volumes.
The Editor's View
A note from the desk
The Bank of England Hike Odds Are Too Low
The Research Brief takes the view that the economist consensus on the Bank of England is wrong, and that a 25bp hike to 4.00% on 17 September is meaningfully more likely than the roughly one-in-ten odds the survey data implies.
The reasoning is arithmetic before it is anything else. Dissent on the MPC has gone one, two, three across April, June and July. The Bank's own July projection has CPI peaking around 3.2% in Q4 with risks tilted upward, and July's outturn of 2.9% arrived above June's 2.6% with the energy pass-through still incomplete. Two converts is all it takes, and the August CPI release lands twenty-four hours before the vote — the most awkward possible sequencing for a committee that would prefer to wait.
The counterargument is real: services employment is still falling even as activity recovers, and hiking into an imported supply shock does nothing to the price of a barrel.
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