The Federal Reserve and Bank of England have both been in focus this week, with the Fed delivering a rate hike and the BoE keeping rates unchanged. In this episode, Imogen Bachra and Stuart Sparks examine what the decisions tell us about the outlook for inflation, interest rates and government bond yields – and why the BoE’s latest quantitative tightening (QT) announcement could have longer-term implications for the gilt market.

Key takeaways:

* The Fed delivered a hawkish-leaning rate hike, with the Chair offering little forward guidance and emphasising that future decisions will depend on the evolution of inflation and economic conditions.

* Markets are pricing a significant further tightening cycle, with close to 100bp of additional Fed rate hikes priced by the end of 2027. But the Fed’s projections imply a surprisingly benign path for inflation, with a return to target minus a meaningful rise in unemployment. 

* The Bank of England held Bank Rate at 3.75%, with the Monetary Policy Committee voting 6–3 in favour of no change. A November BoE rate hike remains the base case, although conviction has fallen.

* QT was the bigger market-moving announcement. The Bank plans to continue active gilt sales at £20bn a year, but will change how those sales are conducted and which maturities are involved.

* This could reduce some near-term pressure on long-dated gilt yields, however QT continues to create fiscal costs.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Stuart Sparks, Head of US Rate Strategy
 
This episode was recorded on 17 September 2026.
 
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Imogen Bachra shares her take on to watch in the week commencing 14th of September. 

* Friday's US inflation data was sufficiently firm that it feels like a 25 basis point hike from the Fed next week looks like the path of least resistance. Our base case is still that this is a one and done move. We still see labour market weakness emerging into 2027, which could ultimately pave the way for rate cuts, but clearly persistently elevated energy prices present an upside risk to this view. 

* We have the BoJ at the end of the week that's likely to follow suit with a 25 basis point hike at its meeting, we think, but we're sceptical that Governor Ueda will offer much forward guidance beyond that – instead repeating what he said in July, that in-depth deliberations will be held at every meeting. From a markets perspective, this may be a little bit disappointing with participants left wondering what exactly it is that Treasury Secretary Besson knows that they do not. This might not be the sort of hawkish surprise that they were looking for.

* The Bank of England could be the only major central bank not to raise rates next week, though we do look for the guidance to formally acknowledge upside risks to the inflation outlook, which would mark quite a hawkish shift from the July MPR, but it would reflect the tone from some of the central bank speakers at the Treasury Select Committee hearing last week. This could ultimately pave the way for a rate hike to be delivered in November, which is now fully priced by markets, but regular listeners will know that that's been our base case since March. More important from a markets perspective at the BOE meeting could be the annual vote on QT, and we see a greater risk than consensus that the pace is  maintained at £70bn compared with consensus that it will be reduced to £50bn. This could add another bearish catalyst for longer yields, which are now well above our long held 5.25% 10-year target. Global factors have been the main driver of that rise in yields, but we have long seen domestic reasons, both on the more hawkish monetary policy side, and the more bearish fiscal policy side that can't keep yields at these levels. 

* While we're on central banks, it's worth reflecting on the ECB last week that it was hawkish enough that we now see the short term terminal rate at 3% up from 2.5% previously. We think they will get there in the first half of 2027. But it's important to note that that's driven solely by credibility in the face of an energy shock, despite weak evidence so far of any contagion to core inflation. We did also upgrade our 10-year bund target from 3.3 to 3.6% both on the more hawkish ECB outlook, but also a bearish structural outlook into the end of the year. 

* Away from central banks, in the UK, it's also the big data week. It perhaps takes on a little bit less importance when it coincides with the week of the central bank decision, but nonetheless, it's another month of data on the inflation front and the labour market front that will feed into the BoE's assessment of the risks of second round effects. We see headline inflation ticking up. This is largely about energy prices. In fact, core inflation is expected to edge down, albeit that's largely a rounding error more than anything else. It doesn't change the fact that the long-term path we still think is towards higher core inflation into 2027, where we have a peak of 3.1%. Although central banks and inflation risks were the theme last week and probably likely to be the theme in the week ahead, we also remained squarely focussed on fiscal risks too.

* Next week brings about a cabinet reshuffle in Japan and we'll most closely be watching whom is announced as the minister of state for economic and fiscal policy. And although there's nothing on the calendar as such, we'll watch any headlines related to potential policies announced in the UK as we near the Labour Party conference, as well as any other announcements from President Trump as we near midterms. 

Good luck.

This week on Bondcast, Imogen Bachra is joined by market specialists Stuart Sparks and Oriane Parmentier to discuss the latest developments across the major central banks and what they could mean for rates markets.

Recorded shortly after the ECB’s meeting, the conversation begins with the central bank’s latest 25bp rate hike and the implications of higher inflation and growth projections. The discussion then turns to the Bank of England ahead of next week’s meeting, including the potential for a change in voting patterns, guidance and the pace of quantitative tightening.

The US is also firmly in focus, with the Federal Reserve’s September meeting approaching. The team considers whether the Fed could deliver a rate hike, the implications of recent inflation data and the potential tension between monetary policy and political pressure for lower rates.

Finally, the conversation examines the US long end, including the latest treasury buyback operation and what its relatively modest size tells us about the authorities’ intentions.

Key takeaways:

- The ECB is becoming more hawkish in its outlook

- The Bank of England could acknowledge rising global inflation risks

- Quantitative Tightening could be the more interesting BoE decision

- The Fed is moving closer to a September rate hike

- The long end remains vulnerable to structural inflation and fiscal risks

Host: Imogen Bachra, Head of Economics and Markets Strategy

Guests: Oriane Parmentier, European Rates Strategist

Stuart Sparks, Head of US Rate Strategy

This episode was recorded on 10 September 2026.

You can also find this episode of Bondcast on Spotify and Apple Podcasts. 

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In this episode of Bondcast: Speakers’ Corner, host Imogen Bachra speaks to Deepika Dayal about one of the key questions surrounding the AI boom: will artificial intelligence ultimately be inflationary or disinflationary?

Deepika explains why the answer depends heavily on the time horizon. While AI could deliver substantial productivity gains over the longer term, the enormous investment required to build the AI infrastructure is already creating pockets of inflationary pressure — particularly in semiconductors, computer equipment, storage devices and software.

The conversation explores whether manufacturers can continue passing higher AI-related costs on to consumers, how AI subscriptions could affect inflation, and what economists should watch for to identify the point at which productivity gains start to outweigh the initial supply-side pressures.

Key takeaways

* AI’s inflationary impact may come before its productivity benefits. The massive infrastructure buildout required for AI is creating demand for specialised chips, computing power and data centres, putting pressure on some technology prices.

* Communication goods are behaving unusually. After roughly 25 years as a source of disinflation, prices for computers, smartphones, software, accessories and other information-processing equipment are showing pockets of upward pressure.

* Chipflation could spread beyond technology. Semiconductors are critical inputs for industries including automobiles and smart appliances. If higher chip costs begin feeding into these sectors, the inflationary impact of AI could become considerably broader.

* AI software is another potential source of inflation. Companies are increasingly monetising AI functionality through dedicated subscriptions and licences. Products such as Microsoft’s Copilot illustrate how AI features that were initially bundled into existing software can become separately priced.

* The impact on headline CPI may initially be limited. Communication goods have a relatively small weighting in the US CPI after decades of disinflation. However, the weighting is larger in the PCE deflator, the Federal Reserve’s preferred inflation measure.

* The key question is when productivity gains arrive. One early indicator could be wage growth. If AI allows businesses to increase output without proportionately increasing labour costs, wage growth could begin to moderate in labour-intensive service sectors without a corresponding increase in labour-market slack.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Deepika Dayal, US Economist

This episode was recorded on 3 September 2026.

You can also find this episode of Bondcast on Spotify and Apple Podcasts.  
 
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Imogen Bachra shares her quick take on the big themes and events likely to move markets over the coming week: 

• US market focus is squarely on the inflation data. Fed Chair Warsh clearly overweighted the inflation data relative to current employment trends in his reaction function, and Governor Waller’s comments in the last week reiterated that point. The strength in the employment report on Friday has raised the bar for the Fed not to hike, but it still feels like a close call that will hinge on the inflation data. For anyone that missed it, following Chair Warsh’s comments at Jackson Hole and the upside revisions to the PCE data, we have now revised our base case call and expect the Fed to hike in September.
•  A 25bp hike by the ECB feels all but certain: recent communication and the July meeting account leave little doubt that the Governing Council is prepared to tighten again. The more consequential question is what comes next. With policymakers showing little appetite for strong forward guidance, the ECB is likely to preserve maximum optionality amid continued uncertainty over energy prices, inflation persistence and the durability of growth. Next week’s data schedule (Sentix investor confidence, the third estimate of Q2 GDP and accompanying employment data) should give a clearer read on the composition and resilience of euro are growth heading into the second half of the year.
•  In the UK, renewed upside pressure on yields this week brought a renewed focus on the fiscal risks. New Chancellor John Healey is set to give a keynote speech on Monday outlining the government’s economic agenda, which could prove another crucial moment for the gilt market to reassess fiscal risks.
•  We’re still watching Japan, both in terms of potential fiscal and monetary policy shifts, but there is nothing specific on the calendar next week that is set to move the needle on either. We’re more focussed on the week after, eyeing a potential government re-shuffle and of course the long-awaited BoJ meeting, where we now  expect a hike to be delivered.

In Bondcast's 250th episode, Imogen Bachra is joined by market specialists Stuart Sparks and Oriane Parmentier to assess a more eventful-than-expected Jackson Hole, the outlook for the Fed, next week’s ECB meeting and the latest move in gilt yields.

The discussion starts with the Fed’s increasingly hawkish stance following Jackson Hole. Stuart explores what a conventional hiking cycle could mean for the rates curve, arguing that three further Fed hikes would push front-end yields materially higher and leave the curve flatter. But the bigger question is whether tighter monetary policy would actually be enough to bring inflation back to target.

The team considers the possibility that the Fed could find itself “trapped” by persistent inflation: unwilling to generate the economic slack necessary to bring inflation down because doing so would risk a significant recession. 

Attention also turns to the ECB, where a September rate hike is now regarded as effectively a done deal. Oriane explains why the focus will be less on the hike itself and more on what happens afterwards, particularly as energy prices remain a source of upside inflation risk. 

Finally, Imogen examines the UK gilt market, following the brief move in 10-year yields towards her 5.25% target (caveats allowing). She argues that the recent sell-off was driven primarily by global rather than domestic factors, although higher yields have renewed concerns around the UK’s fiscal position and debt-servicing costs.

Key takeaways

* Jackson Hole was more hawkish than expected, raising the possibility of a more conventional Fed tightening cycle, although the team’s base case remains considerably less aggressive.

* Term premium remains a key risk, particularly if markets conclude that the Fed is unwilling to tolerate the economic pain required to bring inflation sustainably back to 2%.

* The ECB is expected to hike by 25bp in September, but the more important question is whether it pauses afterwards or is forced into further tightening by persistent energy-price pressures.

* UK 10-year gilt yields have reached the 5.25% target. Global fiscal concerns, elevated borrowing costs and upcoming UK policy events could all keep pressure on the long end.

* The UK fiscal outlook remains a significant source of uncertainty, with higher debt-servicing costs and borrowing already running ahead of expectations.

Host: Imogen Bachra, Head of Economics and Markets Strategy

Guests: Oriane Parmentier, European Rates Strategist

Stuart Sparks, Head of US Rate Strategy

This episode was recorded on 3 September 2026.

You can also find this episode of Bondcast on Spotify and Apple Podcasts. 

Remember to hit subscribe so you can listen to the latest episodes in this series as soon as they're available and get our views on the big themes and events moving markets and shaping the economy.

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Imogen Bachra shares her quick take on the big themes and events likely to move markets over the coming week:

* US jobs data takes a backseat: Non-farm payrolls remains important, but the market may react less dramatically following a more hawkish-than-expected Jackson Hole speech from Fed Chair Warsh. He downplayed recent labour-market weakness and emphasised inflation, suggesting employment data may have less influence on the Fed’s reaction function.

* Eurozone inflation in focus: Germany and Italy publish flash CPI ahead of Tuesday’s euro-area reading. Headline inflation is expected to rise, driven by higher energy prices, while core inflation should remain around 2.5%. A stable core rate would suggest an energy shock requiring only a measured ECB response. A renewed acceleration in services prices would carry greater significance for ECB policy, although recent French and Spanish data suggest this is unlikely.

* UK inflation expectations: Governor Andrew Bailey speaks on Friday – the first MPC communication since July and likely the last before the September meeting. Markets will be looking for any change from his previous message that the BoE was not edging towards a rate hike.

* Fiscal policy returns to centre stage: G20 finance ministers and central bankers meet Monday and Tuesday, with global growth, imbalances and sovereign debt on the agenda. Fiscal concerns are increasingly driving markets, from the US Treasury’s policy moves to upcoming European budget decisions.

* France remains under scrutiny: The first French presidential debate produced little to change the market’s view of French fiscal and political risk. Further spread widening is likely to require a catalyst from the budget or political backdrop.

* UK fiscal risks may be underappreciated: The UK’s fiscal position could prove more worrying than France’s as the Labour Party conference and October Budget approach. The return of Parliament from summer recess could increase political and fiscal headlines, particularly around potential Budget announcements. 

The US Treasury’s surprise decision to double the size of its regular long-end bond buybacks has reignited debate about how governments can manage rising borrowing needs and weaker demand for longer-dated debt.

In this episode, Imogen Bachra is joined by Stuart Sparks and Oriane Parmentier to assess what the Treasury’s move is really designed to achieve – and whether it can do anything to address the underlying fiscal pressures facing the US.

The discussion also looks at the UK’s experience of reducing the average maturity of government borrowing, and why this may offer a warning to other developed markets. In Europe, France remains firmly in focus as investors assess its fiscal position, political risks and the outlook for French government bonds.

Key takeaways:

* Why the US Treasury doubled the size of its long-end buybacks

* The move is more about market liquidity than curve control

* The lessons the US and Europe can draw from the UK

* Why shrinking average maturity may have limited impact on long-term yields

* The structural forces pushing European curves steeper

* What to expect from the Fed at Jackson Hole

* Why the ECB looks increasingly likely to hike in September

* The BoE is in less of a hurry to raise rates.

Host: Imogen Bachra, Head of Economics and Markets Strategy

Guests: Oriane Parmentier, European Rates Strategist

Stuart Sparks, Head of US Rate Strategy

This episode was recorded on 27 August 2026.

You can also find this episode of Bondcast on Spotify and Apple Podcasts.  

Remember to hit subscribe so you can listen to the latest episodes in this series as soon as they're available and get our views on the big themes and events moving markets and shaping the economy.

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Imogen Bachra shares her quick take on the big themes and events likely to move markets over the coming week. Top on the agenda is Jackson Hole, where Fed Chair Warsh’s speech will be watched for signals on rates, term premium and the Fed’s response to pressure for lower yields. Markets will also assess fiscal consolidation efforts and continued heavy sovereign issuance. In Europe, ECB minutes and inflation data will provide further clues on monetary policy. Japan is also important, with stronger inflation supporting the case for a September rate hike, while Deputy Governor guidance will be key. In the UK, NatWest maintains its November rate-hike call despite reduced market expectations.

The latest escalation in the Middle East has reignited concerns over higher energy prices, inflation and the outlook for UK growth. But is this shock really comparable to the energy crisis that followed Russia’s invasion of Ukraine in 2022?

In this episode of Bondcast: Speakers’ Corner, Imogen Bachra is joined by NatWest Group Chief Economist Seb Burnside to examine how UK consumers and businesses are responding to renewed energy price pressures. Drawing on NatWest’s unique customer data, Seb explains why this time looks fundamentally different from 2022, why households have proved more resilient than expected, and why the biggest risks may lie in business confidence and investment rather than consumer spending.

Key takeaways

* The latest energy shock is significantly smaller than the 2022 crisis.
* Businesses are passing higher costs through more quickly than before.
* Consumers have adapted by reducing fuel consumption rather than simply paying higher prices.
* Mortgage refinancing remains manageable thanks to several years of wage growth.
* Inflation remains a greater concern than an immediate collapse in growth.
* The biggest risk is that prolonged geopolitical uncertainty delays hiring and investment.
* The UK economy continues to demonstrate greater resilience than many expected.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Seb Burnside, Chief Economist, NatWest Group

This episode was recorded on 15 July 2026