Oil, Central Banks and the Global Policy Outlook

Oil prices, inflation risks and a more hawkish global policy backdrop are reshaping the outlook for central banks and financial conditions. Matt Jones and Neil Staines discuss the Bank of England’s decision to hold rates at 3.75%, alongside changes to quantitative tightening and three MPC votes for an immediate 25bp hike. With Governor Bailey signalling that persistent oil prices or Middle East tensions could influence the November outlook, they assess why market pricing for around 100bp of UK tightening may be difficult to reconcile with a still-fragile economy and pressure on public finances. The discussion then turns to the broader global monetary policy picture. Following recent 25bp rate increases from the European Central Bank, Federal Reserve and Bank of Japan, attention shifts to the SNB, Riksbank and Norges Bank, alongside September flash PMIs and the growing impact of the energy shock on global financial conditions. In the US, the Fed’s latest hike and more hawkish messaging point to a reduced tolerance for above-target inflation. Despite that shift, Neil continues to see underlying disinflation and a lower peak in US interest rates than markets currently price, absent a further significant energy shock. **Chapters** 00:00 Welcome and introduction 00:27 Bank of England: rates on hold 01:47 UK economy and public finances 02:39 Global central banks 04:01 Oil shock and September PMIs 05:03 Federal Reserve hike and policy outlook 06:04 US macro watchlist 06:31 Weekend sports roundup 07:22 Long and Short picks 07:42 Wrap-up and disclosures For professional investors only. The opinions expressed in this podcast are those of the presenters and do not necessarily reflect the views of Eurizon SLJ Capital, Eurizon Capital, or the Intesa Sanpaolo Group. The information and opinions shared are intended solely for professional investors and should not be relied upon by other investors. Please note that the information provided in this recording is for informational purposes only and is not intended to be complete or constitute an offer to buy or sell securities or any derivatives. It has not been prepared in accordance with legal and regulatory requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. It does not constitute research on investment matters and should not be construed as containing any recommendation, advice or suggestion, implicit or explicit, for any investment strategy or financial instruments, the issuers of any financial instruments, or a solicitation, offer or financial promotion relating to any securities or investments. ESLJ and its affiliates do not assume any liability whatsoever for the contents of this podcast and do not make any representation or warranty as to the accuracy or completeness of any information contained in this communication.