Bulgarian economist, IMF managing director
Global central banks face renewed pressure as governments squeeze independence to manage debt, raising inflation risks and market volatility. Jackson Hole gathers policymakers amid debates on inflation, debt, and the boundary between fiscal and monetary power.
Brent crude has climbed toward $97 a barrel after renewed exchanges of strikes between the United States and Iran over the past week. US strikes have hit sites along Iran's southern coast while Iran has attacked US-linked vessels and bases in the region; shipping through the Strait of Hormuz remains constrained and US pump and diesel prices have risen.
Oil prices have fallen after data showed Asia is set to import its highest monthly crude volume since the US–Iran war began, while traders continue to monitor UN‑level diplomacy and regional tensions. Brent has slipped near $102 a barrel and U.S. crude is trading in the low $90s as markets weigh rising Asian flows against Middle East risks.
The ONS has reported that public sector net borrowing reached £18.3bn in August, above City and OBR forecasts, leaving year‑to‑date borrowing at £77.3bn — £8.1bn higher than the Office for Budget Responsibility expected. Higher inflation and rising debt interest have pushed interest payments to record August levels and narrowed Chancellor John Healey’s fiscal headroom before the 28 October Budget.
The OECD has updated its global forecast, predicting UK growth of 1.1% in 2026 and 1% in 2027, with inflation easing to about 3.1% this year. It cautions that energy shocks from the Middle East war and higher fuel prices could lift inflation and slow growth next year, though the UK shows resilience in domestic demand.
Oil prices hover near $100 per barrel as Saudi Arabia, Iran and Yemen-linked attacks fuel supply concerns. Jurisdictional diplomacy is ongoing with talks at the UN and US-Chinese discussions shaping the market outlook. Analysts say supply routes remain vulnerable while diplomatic efforts seek de-escalation.
The euro has fallen to near 17-month lows after investors have pushed up French borrowing costs and bond spreads. France has faced rising yields, mass protests and a political stalemate over deficit cuts ahead of the presidential election. Markets are pricing greater contagion risk across the eurozone and the ECB is under pressure to act.
The IMF and UN officials have warned at annual meetings in Bangkok that rising energy prices from the US–Iran war, the strongest El Niño on record and higher global interest rates have pushed low‑income, energy‑importing countries toward fiscal crisis. AI investment has bolstered rich economies while poorer nations are paying more of their revenue to service debt and losing fiscal space.
The Strait of Hormuz has seen intensified attacks on commercial vessels with the GFS Pride sinking after being struck, while Cape Dao is reported sinking near the strait. 21 crew members on the Pride were evacuated with no injuries. The incidents follow a broader escalation in U.S.-Iran conflict and implications for global oil trade.
Vessels in the Strait of Hormuz are under heightened threat as new strikes target ships near Oman and Iran hails new tactics. The US says it maintains control of the strait while oil prices rise and markets react.
The Houthis have fired multiple missiles at Aden’s Al-Maashiq Palace, the government says the prime minister and cabinet ministers are unharmed. Attacks also target Marib, while government forces push back Houthi fighters around Taiz amid heavy clashes.
The Federal Reserve has shown no clear path for future rate moves as global central banks tighten. Officials emphasise they do not prejudge meetings, while data suggest inflation remains sticky. Markets are pricing in a likely hold at the October meeting, but risks of a December hike persist.
The Treasury has reported that federal net interest costs for the 2026 fiscal year have reached about $1.05 trillion, making debt service the third-largest federal outlay and larger than defense. The fiscal deficit has widened to roughly $2 trillion for the year, driven largely by higher interest payments as Treasury yields have climbed.
The government has signalled that a third Heathrow runway remains central to plans for growth, while ministers study responses to a public consultation. Heathrow’s owners say expansion would boost the economy and create jobs, but critics warn of climate risks and local disruption as planning hurdles loom.
The IMF has signaled firm policy and financial support for Iraq and Lebanon during annual meetings in Bangkok, with discussions ongoing and a willingness to back programs as authorities outline priorities.
IMF and Gulf states report that diversified export routes, robust reserves, and swift policy action are keeping Gulf economies resilient amid regional instability and a global energy shock. Saudi investments in energy infrastructure and regional cooperation are key factors in weathering disruption.