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This Week in Review | US Inflation, UK Gov’t Budget, ECB Interest Rate Decision (Sept. 11, 2026)

Fisher Investments

This Week in Review covers three major economic events: US inflation remained at 3.4% headline and 2.4% core in August despite Middle East conflict pressures; UK Chancellor John Healey emphasized fiscal discipline and growth-focused policies ahead of October's budget; and the ECB raised rates by 25 basis points, marking its second hike of 2026.

Summary

The episode opens with US inflation data released Friday by the Bureau of Labor Statistics, showing headline CPI unchanged at 3.4% year-over-year while core inflation came in at 2.4%. The hosts note that while inflation has risen from 2.4% pre-conflict levels in February due to Middle East tensions affecting energy prices, the spike has been far less severe than many feared. They emphasize that inflation is fundamentally a monetary phenomenon tied to money supply growth, and with global money supply growth remaining moderate, energy-related pressures should fade over time rather than persist as lasting inflation. The segment cautions investors against overreacting to single monthly reports, stressing that trends matter more than individual data points and that markets are forward-looking, having already priced in economic expectations.

Next, the transcript discusses UK Chancellor John Healey's first major speech in his new role under Prime Minister Andy Burnham (who replaced Keir Starmer earlier in the year). Healey outlined the government's economic vision ahead of October's budget announcement, prioritizing fiscal discipline while framing growth as the sustainable path to healthier finances. The hosts note this speech may have reassured investors concerned about potential anti-business policies or heavy tax increases under the Labour government. They acknowledge upcoming budget anxiety but remind viewers that proposals must still pass through Parliament, and that political divisions within the Labour Party may moderate more radical changes. They also contextualize UK concerns within broader global trends of rising government bond yields affecting many developed markets.

Finally, the episode covers the European Central Bank's Thursday interest rate decision to raise its key policy rate by 25 basis points, the ECB's second hike of 2026. The hosts caution against placing excessive weight on any single central bank decision, arguing that many factors beyond rate changes—including corporate earnings, lending conditions, business investment, and consumer demand—shape markets and economies. They note that eurozone GDP grew in Q2 despite higher borrowing costs and that recent data has beaten expectations. The segment concludes by suggesting that European sentiment remains subdued compared to the US, creating potential for positive surprises if economic reality exceeds already-low expectations.

Key Insights

  • Global money supply growth remains moderate, suggesting that energy-related inflationary pressures should keep fading over time rather than settling in as lasting inflation despite the 3.4% headline CPI reading.
  • Markets are forward-looking and investors have already spent weeks pricing in economic conditions well before monthly data reports land, making single monthly CPI reports rarely decisive in settling inflation debates.
  • Political and legislative realities that existed under previous Prime Minister Starmer, such as divisions within the Labour Party, likely remain and should help water down more radical policy changes.
  • Rising government bond yields have been a global story in 2026, not specific to the UK, with similar debates around deficits and fiscal sustainability taking place across many developed markets.
  • Eurozone stocks don't require rapid growth to perform well; with expectations relatively low, economic reality doesn't need to be spectacular to surprise positively and drive stock performance.

Topics

US Inflation and CPI DataUK Government Budget and Fiscal PolicyEuropean Central Bank Interest Rate DecisionMonetary Policy and Money Supply GrowthGlobal Bond Markets and Borrowing Costs

Transcript

[0:05] Hello and welcome to <i>This Week in Review</i>. This weekly segment is designed to highlight a few things you may have missed this week, what they could mean for financial markets and why they matter to investors like you. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. Now, let's review what happened this week. First, US inflation. On Friday, the U.S. Bureau of Labor Statistics released August Consumer Price Index data, or CPI, showing headline inflation [0:38] remained unchanged at 3.4% year over year, while core inflation, which excludes food and energy prices, came in at 2.4%. The story behind these numbers is largely an energy story tied to…

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