Don’t count your chickens before they hatch

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Don’t count your chickens before they hatch

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Global Economic Weekly

Don’t count your chickens before they

hatch

Global Letter: Don’t count your chickens before they hatch 17 July 2026

The match is not over until it is over. It applies to everything, including the inflation Economics

fight. US June CPI inflation came much softer than expected this week, which led the Global

market to reprice fewer Fed hikes. However, the recent spike in oil prices shows that

uncertainty in the Middle East is far from dissipating and services inflation remains very Table of Contents

persistent and is unlikely to moderate much further. Interestingly, under the new

Global Letter 2

leadership, the Fed wants to learn more from the market, but market pricing can be a

US 4

misleading indicator of underlying views, especially when building credibility under

discretion becomes a relevant dimension for the Fed’s decision-making process. Euro area 8

UK 10

China 13US: Arguments against Fed hikes… and why we disagree

Some clients think the Fed shouldn’t hike because inflation is being driven by one-offs. Emerging EMEA 15

Per our math, however, underlying inflation is well above target. Some have argued that Latin America 17

Warsh could use the task forces as an excuse to not hike. We think he has strategic Key forecasts 19

reasons to hike soon: he’d gain credibility without having to own the inflation problem. Detailed forecasts 20

Research Analysts 26

Euro Area: ECB preview – see you after the summer break

The ECB is likely to keep rates on hold next week. No sense of urgency to hike.

Communication changes are likely to be small, maintaining an implicit hiking bias. We Claudio Irigoyen

Global Economist

expect one more hike in September. Cuts will need to follow in 2027. BofAS