hike

Frankfurt will almost certainly move on Thursday.

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Market odds put a quarter-point hike at close to certainty, which would lift the European Central Bank’s deposit rate from 2.25% to 2.5%.

What makes this a difficult call is not whether the ECB acts, but why, and whether the reasoning survives contact with the data.

The path here has been compressed as the ECB raised rates on 11 June for the first time in three years, lifting the deposit rate from 2% to 2.25% in response to the energy shock from the Iran war, and then held rates in July while Christine Lagarde pointed hawkishly towards September.

August’s inflation figures removed any remaining doubt with eurozone inflation hitting 3.3%, up from 2.9% in July and the highest since September 2023, as energy inflation surged to 14.3% from 10.3%.

The inflation is not spreading

Look beneath the headline inflation and the picture inverts.

Core inflation, which strips out energy, food, alcohol and tobacco, actually fell to 2.4% from 2.5%. Services inflation, the component most closely tied to wages and domestic demand, dropped to 3% from 3.3%.

In other words, there is still little evidence that expensive energy is feeding through into everything else. That is what economists mean by “second-round effects”, and their absence is the strongest argument against tightening.

The ECB’s own research also supports the distinction.

In a paper published on Tuesday, ECB economists found that adverse energy supply factors, driven by geopolitical tensions, accounted for around 90% of the rise in energy inflation between January and May.

“This time the energy supply shock dominates, while demand and public policy stimulus have minor roles,” the economists wrote, adding that “these differences are key to explaining why monetary policy responses differ.”

The 2021-22 surge, by contrast, came from “a combination of large and unprecedented supply and demand-side factors,” which is why the ECB then “raised interest rates forcefully and persistently” rather than gradually.

The national spread across the EU further underlines how uneven this is.

August inflation ran at 4.5% in Spain, 2.9% in Germany and 2.7% in France, three economies facing the same energy shock with very different results, all governed by one interest rate.

Economic growth is the other complication.

The eurozone has proved more resilient than expected, which ING attributes partly to luck, partly to Asian competitors suffering more from the closure of the Strait of Hormuz and partly to fiscal stimulus. However, resilience does not mean the growth could not, or should not, accelerate.

ING characterises Thursday’s expected move as “another insurance rate hike”, or “a dovish rate hike,” noting that even at 2.5% the deposit rate sits within the range the ECB itself considers neutral.

Going further would mean deciding restrictive policy is required, which would be a different judgement entirely.

Everyone is looking to hike at the same time

The ECB is not acting alone, and that matters for the euro.

The Federal Reserve meets on 15 and 16 September, with Chair Kevin Warsh having used his first Jackson Hole address to argue that financial conditions are not restrictive and underlying inflation has not improved.

Investors had put the odds of a US hike at roughly one in three before those remarks, but now price a 60% chance the Fed hikes the target range from 3.5%-3.75% to 3.75%-4%.

The Bank of Japan follows on 17 and 18 September, with markets pricing an 80% to 90% chance of a move to 1.25%.

On the other hand, the Bank of England is expected to hold rates at 3.75% on 17 September as it currently maintains a much higher interest rate than the rest.

If the Fed were to hike while the ECB held, the dollar would strengthen against the euro and that would cut both ways for Frankfurt.

A weaker euro makes European exports more competitive, but it also makes imports dearer, and since oil and gas are priced in dollars, it would push up precisely the energy costs driving the inflation problem in the first place.

Overall, we can assume a September rate hike is a done deal for the ECB but we can also project that it won’t solve the central bank’s current dilemma of raising borrowing costs against an inflation it cannot reach, while withdrawing support an economy could still use.

The United States economy has added 162,000 jobs in August, with large gains in local government education and food services.

The unemployment rate remained unchanged, according to the monthly jobs report released by the US Department of Labor’s Bureau of Labor Statistics (BLS) on Friday.

The data was well above analysts’ expectations. Economists polled by Reuters had forecast 56,000 gains, the Wall Street Journal forecast 53,000, and Bloomberg had forecast 55,000, following a loss of 23,000 in July.

Local government education, or public schools, accounted for nearly 42,000 of the jobs added as the 2026–27 school year begins across much of the US. Teachers typically fall off payrolls during the summer months when school is not in session.

Food service jobs also saw large increases, with the sector adding 59,000 jobs for the month of August compared with the month prior.

There were also gains in construction, which added 22,000 jobs, and healthcare, which added 12,000.

The information sector, which accounts for industries like data processing, web hosting, publishing, broadcasting and telecommunications, fell by 23,000, with notable layoffs at companies including Scripps TV and Zillow, which fall under the umbrella of these industries.

The financial activities sector, which accounts for industries like insurance, commercial banking and real estate, dropped by 12,000.

Mixed data

The data comes in sharp contrast to the ADP national employment report, which tracks private payrolls and found 38,000 jobs added across the US economy.

Meanwhile, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) report released on Tuesday revealed job openings were slightly changed, with 7.3 million in July, up from 7.2 million the previous month, while total separations fell to 5.1 million in July from 5.3 million in June.

The move in job gains comes ahead of the US Federal Reserve’s policy meeting later this month, where the central bank will vote on interest rates. Amid the job gains, CME Group’s FedWatch, which tracks the likelihood of monetary policy decisions, had a 60 percent chance of a 25 basis point rate increase to 3.75–4.00 percent, up from 49 percent on Thursday.

US President Donald Trump was quick to comment on the jobs report and push for rate cuts.

“Lower the interest rates because the U.S.A. is a much stronger credit than it was a short time ago!” he said in a post on his social media platform Truth Social.

He also ramped up threats to cut off trade with nations that the US has a deficit with if the central bank does not cut rates.

Despite a strong jobs report, US markets are trending downwards. The Nasdaq is down 0.2 percent, the Dow Jones Industrial Average is down 0.5 percent, and the S&P 500 is down 0.3 percent amid Trump’s comments.

Meanwhile, Canada released its jobs report amid the ongoing trade dispute with the US. The Canadian economy lost 41,700 jobs, according to Statistics Canada, with the unemployment rate holding steady at 6.4 percent.

“We expect the economy will continue struggling to create jobs in the near term as mounting headwinds from new US-Canada tariffs, greater uncertainty from a flare-up in the trade war, and the ongoing Iran conflict and a shrinking population weigh on hiring,” Tony Stillo, director of Canada Economics at Oxford Economics, said in a note provided to Al Jazeera.

Insurance company executives warned Gov. Gavin Newsom in a letter Wednesday that his plan to shift utility wildfire liability to property insurers would raise premiums across California.

“The party whose equipment ignites a catastrophic fire should bear the economic consequence of that fire,” the 15 executives wrote. “Shifting those costs to policyholders does not reduce the cost of electricity but does make homeownership more expensive and insurance coverage harder to find.”

As the legislative session nears its end, Newsom’s staff and lawmakers have been negotiating behind closed doors on a deal to limit utilities’ wildfire liabilities.

According to a confidential document that Newsom’s staff sent to lawmakers and was obtained by Politico, the governor wants to stop property insurers from recouping their losses from homes destroyed in utility-sparked wildfires.

That could increase homeowners’ property insurance rates by as much as 50%, according to the Personal Insurance Federation of California. The highest hikes would be for those families living in severe fire risk areas.

“The proposal would shift billions of dollars in wildfire costs away from utilities and onto insurance consumers across the state, making coverage more expensive and harder to find,” said Denni Ritter at the American Property Casualty Insurance Assn.

Southern California Edison and the state’s two other big for-profit utilities have been lobbying Newsom and lawmakers to further shield them and their shareholders from wildfire liabilities ever since last year’s Eaton fire caused the price of their stock to tumble.

Government fire investigators said the fire, which killed 19 people and destroyed thousands of homes, was caused by electrical arcing on Edison’s out-of-service transmission line in Eaton Canyon. Edison kept the line in place despite not using it since 1971.

More than 11,000 households have filed suit against the utility, claiming it acted negligently, which the company denies.

Edison is offering settlements to victims of the Eaton fire. A $21-billion state wildfire fund that Newsom and lawmakers created in 2019 to protect the state’s three big utilities from bankruptcy after a fire is reimbursing Edison for its payments to victims.

At a press conference Wednesday, Newsom defended his plan, which also includes limiting the fees of attorneys in wildfire litigation and stopping hedge funds from profiting on the claims.

Newsom said that current law allows insurers to be paid before victims after a fire.

“The insurance industry is going to do everything to make sure they get paid first,” Newsom said.

No legislation has yet been filed to end what are called insurers’ subrogation claims. The legislative session ends Monday at midnight. The short time frame would allow for little public debate of a bill filed this week.

According to the document written by Newsom’s staff, the governor also proposed reducing amounts that local governments receive from utility-caused fires. The California State Assn. of Counties said that would shift costs to local taxpayers.

“Shifting wildfire costs to local governments is unjustified when utilities continue to generate significant profits and return billions to shareholders,” the association said in a brief recently sent to lawmakers.

Newsom also wants to reduce payments that fire victims can receive for non-economic damages including pain and suffering, angering victims of the Eaton fire.

More than 50 Eaton wildfire victims showed up to protest in front of the governor’s mansion on Monday night in Sacramento, where Newsom was holding an event for legislators.

They chanted, “Who should pay? Shareholders should pay!”

What’s the edgiest region in the UK? I don’t mean in the sense of sketchy or fashionable, but where on the map of these four nations feels most at the margins of everywhere else? For my money, the north Cumbrian coast is a strong contender. Hemmed in by the Lake District fells on one side and the Solway Firth and Irish Sea on the other, this strip of towns and villages, farms and nature reserves, clinging to the low-lying littoral, has been battling nature, weather, geology and geography throughout its history.

Coastal erosion is part of the challenge. Like the railway navvies before them, the planners and builders of the England Coast Path (ECP) have done sterling work at plotting a viable footpath and shoring it up. But there are and always will be sections that are compromised and even impassable. I chose a section that would take three days, walking southwards, and my final destination, St Bees, was only reachable via a diversion. It’s all part of the adventure, and we’re lucky to have the ECP as a national trail, as it means issues and obstacles on the English coast will usually be promptly addressed.

I began my walk at Maryport, a natural choice as it’s where the Cumbrian Coast Line, travelling south from Carlisle, meets the seashore. I resisted the urge to jump off the train and set off walking, instead taking time to look around. I’m glad I did. It’s a lovely place, in a ramshackle way, and quite fascinating. The Romans, who called it Alauna, built a fort here; the Senhouse museum boasts Britain’s largest collection of Roman altars and inscriptions found at a single site.

An LS Lowry trail takes in places he painted. I followed it from the church beside the quay, up the steep town steps, and along some of the streets he worked into his compositions. Information panels celebrated less well-known, similarly gifted local painters: Sheila Fell, from nearby Aspatria, and Percy Kelly, born in Workington, known for his thick lines and dark landscapes, who played for Workington AFC under Bill Shanklyand, in later life, became Roberta Penelope.

Out on the coast path, I took in my first views of Dumfriesshire to the north. There were few walkers on the empty strand. At Flimby, the “path” was just a line of kelp on a pebble beach, bordered by flowering sea kale. Clouds of cabbage white and small blue butterflies sprang up as I walked. West Cumbria is the only area where the latter can be found in northern England. An unfamiliar call and a flutter of white wings sent me to my birder app. It was a pair of sandwich terns – an “amber” status bird on the RSPB website.

There were patches of heather and rosehip, occasional dunes and a few birds. Swallows picked off flies. Herring gulls shouted. Black-headed gulls planed. Carrot-beaked oyster catchers fluted their alarm calls. On my left, above the marram grass, I could see industrial plants and old workers’ terraces. The Cumbria coast is more Morrissey lyric than Countryfile fantasy. Boulders have been arrayed to protect against storms. Two teenage girls bronzed (or pinked) themselves on rocks in the midday sun.

Workington welcomed me, after seven miles. I’d been here before, for a “Where tourists seldom tread” feature for this newspaper, but it felt new arriving on foot and from the shore. Workington looks as its name sounds. Decades of industry have made the people steely and friendly. I spent the night above town at the Hunday Manor hotel, which has superb views over the coast and back to the fells.

The next day’s walk to Whitehaven was the longest at about 12 miles. The opening stretch, back down into Workington, was a pleasant surprise. From above town, I’d noted fuel silos, warehouses and industrial estates, but around the harbour the land was all grassy knolls. I could see Scafell Pike rising up to the south-east, and Scotland shimmering to the north. In the distance were cliffs and a wide inlet – my destination, Whitehaven.

I undertook this walk during the the UK’s fifth heatwave, one of the driest, warmest periods in living memory in these parts. As the mercury rose, I climbed up on to the clifftops, pausing at the Howe, a hill originally created from industrial slag, to gulp down water and look up at a 3-metre steel and wood crucifix put up by a local man in memory of his wife. From here, there was a messy section with scant waymarking, but I eventually came to Harrington, a bonny little suburban village, with kite flyers on the bluff and smart little terraces marching up the side streets. I ate lunch and watched trains come and go; they’re regular enough that you can always cut short a walk and hop on one.

Up on the cliffs again, I passed a large windfarm, and approached the village of Parton on a bridleway that sliced through sheep fields. The air was filled with the hairy seeds of thorns, bursting in the heat.

A path beneath dramatic sandstone cliffs guided me into Whitehaven. One of northern England’s loveliest towns, it has all the amenities a tired walker needs. But while it caters to visitors, it hasn’t sold its entire soul to tourism – which is the case with some Lakeland towns.

Whitehaven used to be an industrial powerhouse, shipping tobacco, coal, ceramics, iron ore, limestone and textiles, and it was the fifth most active British port involved in the transatlantic slave trade. The older streets are lined with crumbling mansions. Victorian-era lighthouses and a chimney known as the Candlestick are unmissable landmarks; between these are ghostly traces of tenements, coastal batteries and long-silenced engine houses. Silting and larger ships led to the town being eclipsed by the deepwater ports of Liverpool and Glasgow. Shipbuilding moved to Belfast. Nostalgia, grit, grandeur and decay all mingle in Whitehaven’s collective maritime memory.

I swotted up on Whitehaven’s layered history at The Beacon, one of the UK’s finest and most rejuvenating town museums. Underneath the museum, the Howling Wolf Bakery and cafe serves delicious cakes, toasties and coffee. There are great restaurants all over town – I can recommend The Peddler, in the former bus station, and Zest on the waterside – and every kind of pub, chippy and cafe.

The Edge hotel, which opened last October, will bolster Whitehaven’s ambitions to compete with the Lake District. It was created as a base for coastal activities; the harbour commission, which owns the property, is committed to supporting walkers, cyclists, musicians and community groups. There are 16 ensuite rooms looking out over the marina – an attractive mix of historic quays and jetties (known as tongues), and modern add-ons. The Edge’s irregular polyhedral shape is striking and yet apt. Rust-coloured, it looks post-industrial but also like a storm barrier. Its air-source underfloor heating and solar panels are in keeping with a region famed for renewable energy.

An alternative route was in place for the final leg, with erosion on the footpath forcing me inland. But I was too elated to be bothered by a minor diversion. My coast walk (23 miles direct, but considerably more with walks around towns and hikes to/from the Workington hotel) culminated at St Bees Head with views of spectacular coves, secret beaches and sheer cliffs.

Where the ECP crossed paths with the recently inaugurated Coast to Coast National Trail, I met a few walkers, Aussies rather than Brits, all heading inland for Ennerdale and Helvellyn, there to encounter crowds and join queues. My only company was fulmars, cormorants, herring gulls, ravens and kestrels. When I came across a little colony of kittiwakes nesting on tiny ledges, I decided it was time to sit down too, and soak up the gentle sea breezes and the wide, all-encompassing silence.

The trip was supported by Cumbria Tourism, Avanti, Northern and Stagecoach buses. Stagecoach has DayRider and 3-day Explorer passes. Doubles at The Edge from £117 B&B and at Hunday Manor Country House hotel from £125 B&B.