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FOMC Watch - Hot CPI forces Fed hike

FX Weekly - Yen surges, central banks in focus

The yen strengthened sharply as markets increased their expectations for Bank of Japan rate hikes… but higher energy prices later weighed on the currency. The euro gave back some gains as rising energy prices and US Treasury yields supported the US dollar. The ECB’s 25-basis-point hike had little impact on the euro. The Bank of England is likely to adopt a slightly more hawkish tone next week. A near-term rate hike remains unlikely, but risks are rising. The UK government is expected to use targeted tax increases to address fiscal pressures while avoiding major spending cuts. We expect EUR/GBP to rise modestly and GBP/USD to remain slightly stronger, with end-2026 forecasts unchanged at 0.86 and 1.36, respectively.

ECB Watch - ECB rate hike cycle looks far from over

Global economic forecasts as of 7 Sept 2026

Group Economics writes regularly about developments in the macro economy. Here are our latest forecasts on interest rate and currency developments, energy prices and the economic trend in developed and emerging markets.

Spotlight - US Midterms – Trump can veto, Democrats cannot

The upcoming mid-terms are of little importance for the direction of policy, merely the potential speed. Our base case is a divided congress, which implies that Trump will continue to rule by Executive order.

Spotlight - A perfect storm for food inflation?

Food inflation remained contained in recent quarters, but leading indicators suggest upward pressures are building and we expect food inflation to start rising again towards the end of 2026 and into 2027. Heat and drought records were once again broken across the EU and the US, which is expected to put upward pressure on European food price. The impact of El Niño is likely to be more mixed. Our base case sees food price rises adding 0.5pp to eurozone HICP inflation at its peak by Q3 2027.

Key Views Global Monthly August 2026

The global economy remains resilient in the face of a succession of shocks. While the energy shock is back with a vengeance, its effects are more idiosyncratic now, and much more impactful for Europe than the US. Meanwhile, a capex troika centred around AI, defence and the energy transition are continuing to drive growth, which is expected to hold roughly around trend rates in advanced economies. The global investment surge is also supporting growth in China, although imbalances there continue to fan trade tensions with the EU. Against this backdrop, inflation will remain somewhat elevated over the coming months, and this should keep central banks leaning hawkish, with the ECB expected to raise rates further in September, and a risk that the Fed has to tighten policy. Our base case sees both central banks resuming rate cuts in 2027.

China - Domestic imbalances worsening, trade tensions brewing

Supply-demand imbalances worsen amidst weak growth momentum. Beijing still seems to be taking a cautious approach towards fresh stimulus. US-China tensions resurface in run-up to Trump-Xi summit; tougher EU stance on China.

US - A race against the clock

Warsh’s Jackson Hole speech increased the perceived odds of a September hike. The broader FOMC still seems divided. The speed of progress on the disinflation process is key. The labour market muddles along, with weak hiring and employment caught by dwindling supply.

The Netherlands - Resilient in an uncertain world

In the first half of this year, the Dutch economy grew stronger than previously expected; growth will slow in the second half. We expect growth of 1.3% in 2026 and 1.1% in 2027. The minority government has reached an agreement, and will introduce purchasing power support. Given its minority status, the budget will likely still be amended.