Macroeconomics: The Day Ahead for 17 September 2026

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As the dust settles on yesterday’s FOMC meeting, the focus shifts to the Bank of England meeting today and the BoJ tomorrow, with tensions in the Persian Gulf and Arabian Peninsula continuing to run high, even if crude prices appear to have suffered a case of vertigo yesterday, as traders appeared to reconsider how constrained supply is going to be, amid ostensibly strenuous efforts by Saudi Arabia to ensure that any impact from the suspension of its East-West pipeline will be modest.

The day’s statistical schedule is not without its highlights in the shape of the overnight New Zealand Q2 GDP and Singapore Exports, with final detailed Eurozone CPI, weekly jobless claims, Philly Fed Manufacturing, Housing Starts and Pending Home Sales ahead, though likely to be largely overlooked given the rush of G7 central bank meetings and long-standing geopolitical influences.

U.K. – BoE Rate Decision

The BoE is expected to hold rates at 3.75% at today’s meeting but is expected to signal a shift to a more hawkish stance, with a rate hike in November now largely discounted by markets, above all due to rising risks of a spillover from high energy prices and rebounding food prices.

Rate hikes are, of course, a very blunt instrument for supply-disruption-driven rises in food and energy.

The hitherto dovish majority have argued that rates are already modestly restrictive and have also stressed that weakness in labour demand and a lack of wage pressures justify a ‘wait and see’ stance, while the hawks view the protracted period of high energy prices as increasing the risk of spillover effects and the need to be pre-emptive.

The vote is again expected to be 6-3 to hold, with Pill, Greene and Mann dissenting in favour of a hike.

Governor Bailey has been very much pivotal on rate decisions for the past 18 months, and his recent comments have emphasised upside risks to inflation, though he also noted that high long-term rates (i.e. gilt yields) already reflect market inflation concerns (i.e. markets are doing some of the work for the BoE), but also that the recent lack of spillover effects may not last.

The fact that the Fed and ECB have already hiked rates will add to pressure to adopt a more hawkish stance.

Outside of an unexpected shift in the vote, it will be what the statement notes on risks to inflation and labour markets relative to the last BoE Monetary Policy Report which may offer some further hints of a more hawkish tilt.

U.S.A. – FOMC Meeting

The 12-0 vote to hike rates was perhaps the most emphatic signal on rates, particularly after the three dissents in July, and serves to reinforce the Fed’s credibility, with the dot plot signalling a further 25 bps rate hike by year-end, but steady rates in 2027.

The latter not only clashes with markets that currently discount two further rate hikes in 2027, but also with the Summary of Economic Projections, which only anticipates inflation returning to the Fed’s 2.0% target in 2029.

Warsh stuck largely with his Jackson Hole assessment on the current state of the economy, noting that “domestic spending has been resilient, productivity growth strong, and capital investment is robust”, while effectively hinting that rates will likely need to rise again with the comments: “Inflation remains elevated. Today’s policy action will support a timelier return to the committee’s 2% goal,” and “I would be hard-pressed to describe broad financial conditions as restrictive.”

For the time being, a December rate hike looks more likely than October, above all due to the latter’s proximity to the mid-term elections.