Inflation

Tehran, Iran – Amid dire fuel shortages and mounting economic challenges, the Iranian government is seeking cost-saving measures for government workers and other citizens to deal with the crisis.

On Saturday, the government set office attendance hours for 8am to 1pm from September 23 to the end of the current Iranian year (late March 2027), with the remaining contractual hours to be completed remotely.

Agencies must also designate one day a week when employees and managers travel to work by public transport. In recent days, government ministers have released videos showing themselves using the metro to commute to work as part of the campaign.

Metro and bus rapid transit (BRT) systems will also be free of charge until mid-November in a bid to encourage commuters to leave their cars at home. Worn-out government vehicles will also be replaced with electric, gas-powered or hybrid alternatives, although this is expected to take years to implement.

The reopening of universities is expected to be staggered and partial, with some lessons shifted online by authorities.

Government-linked offices are required to switch off heating and turn off lights after working hours, while schools, universities, healthcare facilities and operational services are to follow separate arrangements to be announced later.

President Masoud Pezeshkian signed a directive on September 12 instructing government agencies to facilitate remote work for suitable employees to save on petrol, electricity and natural gas costs for the state.

“We have begun consumption savings with the government,” Pezeshkian said earlier this month. This is seen as effectively framing remote work and other measures for government workers as in line with other energy-saving measures that the government has asked of the rest of the population.

Resource-rich Iran has dealt with energy crises before, rooted in mismanagement and dated infrastructure, when similar cost-saving measures were implemented. But the added pressure of war with the United States and Israel has forced the government to think of creative solutions to energy shortfalls.

In early September, the cash-strapped government raised the price of fuel for the third tier of quotas for a second time in less than a year, meaning that people will pay double for any petrol use beyond 110 litres (29 gallons) per month. Imported vehicles and some other categories of cars are also limited to the most expensive tier of fuel.

For the first five months of the current Iranian year, which ended on August 22, average daily petrol production was 122 million litres while consumption was at 132 milion litres, highlighting a shortfall in supply versus demand. In the first half of the sixth month, the gap between production and consumption was around the same, at a 10 million litre shortfall.

The US naval blockade of Iran’s southern ports in place since July has halted fuel imports that previously helped balance the gap. The blockade has also stopped Iran from exporting its oil via supertankers transiting the Strait of Hormuz, affecting its foreign currency income. Crude stored on open waters beyond the blockade line is still being gradually sold to China.

Oil and gas facilities, petrochemical companies and major fuel depots were also bombed by the US and Israel, impacting production and distribution. Oil Minister Mohsen Paknejad said in early September that “a significant portion of production capacity has now been restored, and the process is continuing”.

As rampant inflation continues to squeeze most Iranians, data released this week by the Statistical Center of Iran also highlighted the damage the war with the US has dealt to the economy.

Iran experienced a massive 10.1 percent year-on-year fall in real gross domestic product (GDP) and a 26.4 percent fall in oil and gas extraction between late March and late June 2026, the centre’s data showed.

Including oil, industries and mining were down 14.7 percent, while construction was down by 6.4 percent, services overall by 4.8 percent, and transport, storage and communications by 17 percent.

The government has not released any information on how many workers are estimated to be affected by the remote work directive, or how it expected efficiency to be impacted.

But after decades of mismanagement, corruption and inefficiency among government-linked organisations, some Iranians believe it highlights a wider issue of state inefficiency.

“My unpopular opinion is that if 85-90 percent of government sector personnel are fired and 70 percent of ministries closed down, absolutely no problem will occur in the country,” a user named Mohsen wrote on X.

Zabihollah Salmani, a deputy head of the Administrative and Employment Organisation of Iran, told reporters during a press conference in August that more than 2.43 million were on its payroll.

If council, fire brigades, social security and non-government organisation workers were included, this would bring the number to more than four million people. The average monthly pay for government personnel at the end of the previous Iranian year in late March 2026 was around 240 million rials ($104 at the current exchange rate).

Asked by reporters how many of these employees could potentially be taken off the payroll without hurting output, Salmani said, “We do not yet have these figures.” He added that agencies were being asked to submit that information.

About 1,075,000 people are on the payroll of the Education Ministry, including teachers and trainee staff, while 600,000 employees work under the Ministry of Health and its affiliated networks, according to official figures.

Amir-Hossein, a young man working at a research centre linked with the government-funded University of Tehran, said that since the start of the month, he had been assigned two days of remote work. Working hours were set for 7am-1pm before, but are to be shifted to 8am-1pm starting from Wednesday, per the government.

His work can be done on his laptop, but might require some coordination on the phone or short commutes to other centres, he said. Overall, the remote work lifestyle has been beneficial.

“Sometimes I get more work done than I would have at the office,” he told Al Jazeera, asking not to use his full name due to security reasons.

As Amir-Hossein regularly uses online ride-hailing services to commute to and from his job, working from home has been financially beneficial for him.

An Iran-based economist who spoke to Al Jazeera on background said the government measures are essentially crisis control at best, and not a long-term solution to the problem.

Political parties in Morocco are intensifying campaign efforts before legislative elections on September 23, which will ultimately decide Morocco’s next government.

Twenty-seven political parties are competing for 395 seats in the House of Representatives and the vote comes at a crucial time for the country.

Rising living costs, pressure on public services, and high youth unemployment – currently at 37.3 percent for Moroccans aged 15 to 24 – are all issues being hotly debated.

Party headquarters across Morocco and sites at packed city neighbourhoods and markets have been transformed into electioneering operation rooms. Campaign teams navigate crowded streets with loudspeakers, music, and leaflets to catch the attention of Morocco’s 15.8 million registered voters.

“We choose communication locations carefully; we start from a field map where we define the spaces where citizens meet naturally, then we divide the team according to tasks between direct communication and recording observations,” al-Wali al-Shtouki, campaign manager for the Justice and Development Party (PJD) in the Medina-Sidi Youssef Ben Ali district, told Al Jazeera.

“We also hold small meetings at the headquarters because they allow a calm and direct dialogue to understand what the citizen actually expects. What we hear in the field is what guides our daily work. After every tour or meeting, we collect observations and repeated questions and discuss them within the team, then we distinguish between local issues that need follow-up and those related to public policies and parliamentary work.”

While physical headquarters serve as hubs for election campaigns, a party’s success ultimately relies on its roots within a community, Jawad al-Shafdi, head of the Moroccan Observatory for Political Participation, said.

“In the Moroccan case, the strength of the candidate, their local extension, their network of relationships, and their electoral record also play essential roles,” al-Shafdi told Al Jazeera.

“We may find a party with limited organisational presence in a specific district achieving a significant result thanks to a strong candidate, and vice versa. Winning votes is achieved through a more complex system that combines party organisation, candidate strength, local extension, networks of elected officials, direct and digital communication, in addition to the party’s image and political offering.

“Therefore, the true criterion is not the number of people who enter the headquarters, but its ability to convert organisational movement into electoral mobilisation, mobilisation into votes, and votes into seats.”

Digital, direct engagement

The competition has forced political groups to adopt multi-channel strategies that balance street-level outreach with digital campaigns to reach a broader audience.

Fatima al-Tamni, a candidate for the Left Alliance in the Ain Sebaa – Hay Mohammadi district in Casablanca, highlighted the necessity of direct engagement with voters rather than superficial campaign displays.

She believes that party campaigns should serve as a space to listen to the concerns of the electorate and propose solutions, while building a strategic vision for transport, housing, pollution and other issues.

“We do not want to speak to the citizen from above, nor turn the campaign into a festival of pictures and slogans… We want to speak with them in clear language, and hear from them before we speak in their name,” she said. “[It] is not an end in itself, but the beginning of a new political relationship with citizens based on clarity, accountability, and fulfilling commitments.”

Youssef Ait Sidi Said, a political activist with the Progress and Socialism Party in the Chichaoua province, said campaigning remains an evolving process.

“For the party, this campaign is no longer just a specific period to introduce candidates and the electoral programme, but has become an opportunity for direct and continuous communication with the population and listening to their concerns and expectations,” Ait Sidi Said told Al Jazeera.

“Digital platforms allow reaching broad groups, especially youth, and grant them the possibility to interact, ask questions, and express their opinions. However, we do not consider that digitisation can replace direct communication. On the contrary, we see that each tool has its function.”

Ultimately, direct engagement with voters should remain the hallmark of party campaigns, he said.

“Field communication allows direct listening to the citizen, while digital platforms allow expanding the reach, interaction, and documenting activities,” Ait Sidi Said added.

Tehran, Iran – Hossein, a 32-year-old marketing specialist based in Tehran, has been thinking of replacing his 13-year-old Iranian-made car with a newer model.

Even though he earns about four-and-a-half times the minimum wage after a recent pay rise – his salary is now close to 900 million rials (about $390 at the current exchange rate) – imported vehicles are not even remotely affordable for him.

Even finding a locally made car might be out of his budget, with an economic crisis gripping the country since the United States and Israel launched a surprise war on Iran on February 28 and later enacted a crippling siege and sanctions on the country.

“I’m losing hope of ever being able to buy a new domestic production car too, unless the country opens up and becomes a bit more normal again,” Hossein, who asked to keep his full name confidential for security reasons, told Al Jazeera.

His old manual Peugeot 206 model, an originally French-made car but now produced domestically after foreign counterparts left Iran due to sanctions, can fetch up to 10 billion rials ($4,350) if he sells it towards making a new purchase. However, his replacement options are limited.

Upgrading to a slightly improved Peugeot 207 with an automatic gearbox could cost him 28 billion rials ($12,170) now. This means that, after selling his car, he would need more than 20 months of his entire salary.

A domestic sedan Shahin model costs more than 31 billion rials ($13,480), and a crossover Reera is priced at more than 43 billion rials ($18,700).

With these options, he would need to save about 24 months and 37 months of his whole salary, respectively, and that is if prices remain stable and he does not spend a rial on anything else. But the reality of the fast-rising living costs and lagging incomes in Iran means he can barely put aside any money, let alone afford a new car.

Domestic car prices have mostly risen 40 to 80 percent since the start of the war, while some vehicles sell for more than 130 percent of their September 2025 costs.

The costs of maintaining the vehicles are also rising much faster than people’s salaries. Domestically produced tyres, motor oil, brake pads and clutch kits have at least doubled since last year, with some car parts having more than tripled in price.

Domestic vehicles have generally low safety standards, meaning that they contribute to staggering road accident deaths. At least 1,609 Iranians have been killed so far on intercity roads in the current month of Shahrivar of the solar Hijri calendar, which ends on September 22. More than 20,000 people lose their lives on the roads every year. In comparison, fewer people in the whole of the European Union, nearly five times Iran’s population, died on roads last year.

Iran’s fuel-guzzling cars also contribute to smoke-congested city streets, degrade vehicles faster and increase fuel costs, just as petrol prices have risen for users.

How did we get here?

Experts say, due to a combination of protected state-linked businesses, privileged access, economic isolation and a curtailing of imports, Iranian households have no choice but to pay exorbitant prices – compared with their salaries – to buy low-quality cars.

The damage from the war, including the extensive bombing of multiple steel giants by Israel and the US, has only added insult to injury. The naval blockade of Iran’s southern ports has prevented goods coming in from popular neighbouring markets like the United Arab Emirates.

Under such circumstances, domestic vehicle manufacturers have little incentive to improve.

End customers are also beset by government charges, currency and financing costs, margins levied by murky intermediaries – and in numerous documented cases, industry corruption.

“People are forced to buy expensive low-quality cars whose real prices should be a quarter of global prices, and this is a direct harm done to them,” Mohammad Rashidi, a member of the presiding board of Iran’s parliament, told local media on Saturday. “The traces of a mafia system are visible throughout the process.”

His claims echo those of other officials and state-linked media, who have openly described the industry as resembling an organised crime operation.

According to the latest figures released by state media, about 233,000 cars were manufactured or assembled in Iran in the first five months of 2026, compared with 366,000 the year before. Only about 25,000 vehicles were imported in that period.

Only a handful of state-linked companies or intermediaries are allowed to import vehicles, with duties plus value-added tax increasing final prices up to 200 percent.

The government and parliament have discussed lowering import tariffs this year, with no agreement announced so far.

The premiums are more visible for high-end cars, with a 2026 Toyota Land Cruiser VXR going for approximately 660 billion rials ($287,000) in Iran at the moment, while the same model is available for about $86,000 in the UAE. The same story applies to most other models, at different rates depending on the rarity of the vehicle and the availability of parts.

The price of a mid-range Chinese-designed SUV sold as Exeed VX in international markets is listed at about $32,000 in China, while it is priced at about $42,000 in the UAE. The same car, assembled from imported parts by a state-linked company in Iran under a different name, currently costs Iranian customers the equivalent of $53,000.

The bizarre situation was on full display during a three-day “international” car exhibition in Tehran last week that mostly featured Chinese-manufactured vehicles. These remain available in Iran despite the US sanctions, since Tehran exports almost all of its oil to China and barters this for goods, including cars.

Some domestic manufacturers and importers were absent, either because they had no products to offer or because they had angry customers who registered months ago to get vehicles they never received. Spare parts for some of the vehicles on display are currently either not available in the Iranian market or cost several times their price in international markets.

Even the cheapest vehicles offered at the exhibition were completely unaffordable to the average Iranian. It would take a worker on the minimum wage with standard allowances 50 years to buy an XPENG G9, a Chinese-made electric SUV priced at 120 billion rials ($52,150), on his or her salary, without spending a rial on food, housing or clothing.

Still, there were huge queues outside the exhibition centre each of the three days.

“It was sad because most people just came to take pictures with the cars they knew they could never afford,” a young man who attended the exhibition told Al Jazeera. “The doors of the cars were locked too.”

President Trump came to battleground North Carolina doubling down on a tantalizing and implausible midterm promise. “If we win,” he said, “we’re going to get you $5,000. So that’s it. Very simple.”

The Republican candidates who spoke at the rally had nothing to say about it.

Their silence reflects a broader pattern. About a week after the president unveiled his “Trump dividend” pledge at the party’s unusual midterm convention in Dallas, there is little evidence that Republicans in competitive races have incorporated it into their campaigns.

The pledge hasn’t been a staple of television advertising, whether from Trump’s own political operation or his party’s candidates. It usually only comes up when reporters ask about it, prompting most Republicans to sidestep the idea.

The Republican National Committee considers the proposed payments part of Trump’s broader economic vision and says candidates should get behind it.

“Of course we encourage all Republican candidates to run on his agenda, and that includes efforts to put more money in the pockets of the American people,” spokesperson Natalie Baldassarre said.

There are some exceptions. Republican Rep. Derrick Van Orden, who is seeking reelection in a battleground Wisconsin district, has praised the proposal.

The idea comes as the economy confronts rising interest rates, continuing inflation and climbing fuel costs. Republicans are fighting to keep their majorities in the House and Senate.

Trump previously promised to use savings from his White House advisory team, which he calls the Department of Government Efficiency, or DOGE, and revenue from tariffs on imports to distribute payments of $2,000 or more, but none of that came to pass. The president has said he did not think congressional approval would be needed for the idea, which could cost more than $1 trillion, but House Speaker Mike Johnson (R-La.) indicated the promise would require lawmakers to act.

Democrats point to those previous suggestions for a payout to raise skepticism about the $5,000 pledge.

“This idea is nothing more than a recycled broken promise that voters know Republicans will never deliver,” said Viet Shelton, a spokesperson for the House Democratic campaign arm.

Republican campaign advertising has largely focused on the One Big Beautiful Bill Act, including provisions that temporarily cut taxes on tips and overtime. Other candidates are concentrating on local issues or attacks against their opponents.

Doug Heye, a Republican strategist and former Republican National Committee communications director, said there is little mystery about why candidates have been reluctant to embrace the pledge.

“It’s a dumb idea,” Heye said. “There’s no way to pay for it and it would spike inflation.”

Catalini writes for the Associated Press.

Bank of Japan raises benchmark interest rate from 1 to 1.25 percent, pledging to help counter inflation risks.

The Bank of Japan (BoJ) has raised interest rates by 0.25 to 1.25 percent, pushing borrowing costs to their highest level in 31 years, amid rising inflation and wages, and pressure from Washington.

The move on Friday marked the first hike since June, and takes interest rates closer to levels the BoJ deems neutral to the economy, marking another step away from decades of ultra-low rates that cemented the yen’s status as a cheap global funding currency.

Japan is grappling to contain inflation, which is being driven by factors including rising energy prices, global supply pressures and domestic inflation exceeding the 2 percent target.

Core consumer inflation held steady near the target in August, data showed on Friday, as companies continued to pass on rising costs for a wide range of food and grocery items.

The country also faced a “slow-moving demographic shock” with a shrinking labour pool lifting wages, a structural factor that ⁠cannot be dismissed as temporary, BoJ Executive Director Koji Nakamura said on Monday.

The Federal Reserve’s rate hike on Wednesday, and the prospect of another one later this year, have added pressure on the BoJ to keep pace.

Further widening of the United States-Japan rate gap risks weakening the yen and lifting inflation through higher import costs, analysts told the Reuters news agency.

Its policy rate also remains lower than the European Central Bank, which raised its key rate to 2.5 percent last week.

Such pressure could affect the tone of BoJ Governor Kazuo Ueda’s post-meeting briefing, which will be closely watched by markets for clues on the timing and pace of further increases.

Published on
17/09/2026 – 13:17 GMT+2

The ‘Old Lady of Threadneedle Street’ has chosen to wait, though not unanimously.

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The Monetary Policy Committee voted by a majority of six to three on Thursday to leave borrowing costs unchanged, with the dissenting trio pushing for a quarter-point increase to 4%.

The decision puts the Bank of England at odds with the Federal Reserve and the European Central Bank, both of which have tightened within the past week.

Despite holding, the central bank expects the situation to worsen before it improves.

Inflation “is likely to rise further over coming quarters,” the committee said, pointing to crude and refined energy prices that have climbed again since its last meeting and remain “more volatile and higher than pre-conflict.”

Watching for second-round effects

The case for holding rests on what has not yet happened.

“There has been little evidence so far of material second-round effects in price and wage-setting,” the statement read, meaning expensive energy is not yet feeding into broader wages and prices.

However, that reprieve may be temporary.

The risk of such effects “is greater the longer higher energy prices persist or are more volatile,” the committee warned, adding that risks to the inflation outlook are “tilted to the upside, and more so than at the time of the July Monetary Policy Report.”

Brent crude and UK wholesale gas prices have risen 36% and 78% respectively since July, with Brent at $106 a barrel and gas at 207 pence per therm on 14 September.

Refinery pressures have kept crack spreads, the gap between refined fuel prices and crude, well above pre-conflict levels.

Economic activity has held up slightly better than expected, while a soft labour market and the higher borrowing costs households and businesses have faced since the conflict began should bring inflation down over time.

A crowded week for central banks

The Fed raised its benchmark on Wednesday to a range of 3.75% to 4%, its first increase since 2023 and a unanimous decision, while signalling more to come.

The ECB lifted its deposit rate to 2.5% last week.

The sequence concludes on Friday with the Bank of Japan, where markets expect a hike.

That would leave the Bank of England as the only major central bank to have stood still this week, though on Thursday’s evidence not by much.

Additional sources • AP

WASHINGTON, United States: The US Federal Reserve on Wednesday raised interest rates for the first time since 2023, defying President Donald Trump’s demand for cuts, as central bank chief Kevin Warsh stressed the need to combat inflation that has been “too high” for “too long.”

The Fed’s Federal Open Market Committee voted unanimously to raise rates by 25 basis points to between 3.75 and 4.00 percent, saying the rate hike would support a “timelier return” to its two-percent target for inflation.

Warsh, appointed by Trump, said the decision was a “serious” one, but needed to be taken.

“The plain fact is that inflation is too high, and has been for too long,” he told a press conference.

And Wednesday’s rate hike may not be the last — the vast majority of Fed policymakers indicated that at least one more rate hike was likely necessary before the end of the year, according to their Summary of Economic Projections.

US households and businesses have been battered by years of higher-than-target inflation, and prices have surged in the wake of Trump’s war on Iran, his signature tariff policies and the ongoing AI boom.

Trump has launched an unprecedented assault on the Fed’s independence since taking office, attempting to fire a Fed Governor and launching a criminal probe against Warsh’s predecessor in his quest for lower rates to spur economic activity.

The president’s Republican Party faces a stern test in upcoming midterm elections, with rival Democrats seeking to wrest control of both houses of Congress and economic issues front-and-center for voters.

Growing calls for hike

The Fed has held rates steady since January, choosing to wait to gauge the effects of the Iran war’s energy price shocks and to let the impact of tariffs on prices ripple through the economy.

Since July, however, a growing faction of policymakers had indicated a rate hike may be required to tame inflation, as the war grinds on and prices remained elevated.

On Friday, August’s consumer price index came in at 3.4 percent — unchanged from the month before, but still well above the Fed’s long-term two-percent target.

In its SEP, the Fed raised its forecast for its preferred gauge of inflation — the Personal Consumption Expenditures (PCE) price index — by 0.1 percentage points to 3.7 percent by year-end.

The Fed also raised its projection for GDP growth by year-end to 2.3 percent, up 0.1 percentage points.

‘Rather unfortunate’

US stock markets largely priced in Wednesday’s rate hike, but they were still down on the news — expected with any rate hike as equities become less attractive.

Yields on 10-year US Treasury bonds — which have surged in recent days as uncertainty on long-term inflation has spiked — were also up past the five-percent threshold.

Following the Fed’s announcement, White House spokesperson Kush Desai said the decision was “rather unfortunate” and that Trump had been clear that he wanted lower interest rates.

Warsh was named to his position after a contentious Senate confirmation process, where Democratic lawmakers accused him of being a “sock puppet” for Trump, which he denied.

So far, Trump has supported Warsh, claiming that the Fed chair wants lower rates and accusing the board of being “political.”

The Fed has a dual mandate to deliver maximum employment while keeping inflation to its long-term two-percent target.

It mainly achieves these goals by setting the key US interest rate — lower rates tend to spur economic activity but fuel inflation, and hiking them cools both activity and prices.

The Fed’s SEP showed that at least 12 of 18 policymakers who participated in the projection expected one more rate hike would be required before the end of the year.

Four policymakers expect two more rate hikes to be required.

Warsh has criticized the Fed’s policy of offering such projections in the past and did not participate in the previous iteration in June.

This projection also included only 18 policymakers, suggesting he had once again withheld his contribution.

Kevin Warsh has broken away from US President Donald Trump in his first Fed move, and he has done it with the entire committee behind him.

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The Federal Open Market Committee lifted rates on Wednesday after holding them at 3.5% to 3.75% since December, ending a pause that had grown harder to justify as energy costs pushed prices higher.

Not a single member dissented in a unanimous 12-0 vote.

That matters because the pressure ran in both directions as three regional presidents had voted for a hike in July, while the White House spent months demanding cuts.

Nobody voted for either extreme.

At the time of writing, the market reaction to the decision has been fairly muted likely due to the fact that the hike was widely expected.

A statement stripped to the bone

The Fed’s communication was as striking as its decision.

The statement ran to three short paragraphs, a fraction of the length markets are used to, with no forward guidance and no hedging.

“Inflation remains elevated,” it read, adding that “today’s policy action will support a timelier return to the Committee’s 2 percent goal.”

The word “timelier” carries an implicit admission that the return had been too slow.

Then a sentence the Fed almost never writes: “The Committee will deliver price stability.” Not seeks to, not is committed to. Will.

The economic assessment was also confident throughout.

Activity is “expanding at a solid pace”, domestic spending “has been resilient”, productivity growth is “strong” and capital investment “robust”, while job gains “have kept pace with the workforce”.

Uncertainty remains elevated, the Fed said, owing partly to “geopolitical developments”, its formulation for the Iran war.

By describing an economy in good health, the committee removed the argument that higher rates would damage growth, which is precisely the case US President Donald Trump has been making.

Boxed in by the data

The decision had been building for months.

Three regional Fed presidents dissented in July in favour of an increase, the most in one direction since 2016, and several others said afterwards they were ready to move unless inflation eased which it did not.

The Fed’s preferred gauge, the personal consumption expenditures index, ran at 3.7% in both June and July, with core inflation at 3.3%. Before the Iran war sent fuel prices climbing, core stood at 3%.

Consumer prices held at 3.4% in August, but the monthly increase of 0.4% was the sharpest since May, evidence the energy shock is feeding through. Inflation has now been above the 2% target for more than five years.

Warsh had effectively committed himself at Jackson Hole in August, telling the symposium he “would be hard pressed to describe broad financial conditions as restrictive” and warning that unless underlying inflation moved to target “clearly and at sufficient speed”, the Fed had “work to do”.

Markets took him at his word as the CME’s FedWatch tool put the probability of a rate hike above 90% before today’s decision.

Defying the president who chose him

US President Donald Trump had spent months demanding the opposite, insisting the country should have the lowest interest rates in the world and choosing Warsh partly on the expectation he would deliver them.

Warsh himself said while campaigning for the job that rates could come down.

The treatment of his predecessor sharpened the stakes as Jerome Powell was publicly attacked for moving too slowly, and the US Justice Department opened a criminal investigation into testimony he gave to Congress.

Today’s decision could also have a restoring effect on the perceived independence of the Federal Reserve as an institution.

The technical details point to a Fed settling in at the new level.

The interest rate on reserve balances rises to 3.90% from Thursday, the primary credit rate to 4%, and standing repurchase operations will run at 4%. Seven regional reserve banks requested the discount rate increase.

The Fed’s new dot plot shows 12 of 18 officials expect another 0.25% hike by year-end, taking rates to 4.125%, while four see rates reaching 4.375%.

The hawkish signal extends well beyond 2026 as 14 officials see rates ending 2027 above today’s level, while the 2028 median stands at 3.9% versus 3.4% expected.

The longer-run rate also rose to 3.2%, suggesting officials increasingly believe neutral rates have moved higher while economists also expect more to follow.

DEVELOPING STORYDEVELOPING STORY,

The 25 basis-point hike is the first raise in three years and comes ahead of critical midterm elections in the United States.

The United States Federal Reserve has said it will raise interest rates by a quarter of a percentage point as inflation, driven by soaring fuel prices amid the US-Iran war, continues to weigh on the economy.

The Fed, which is the central bank of the US, said on Wednesday that it will hike interest rates by 25 basis points to 3.75 percent to 4 percent.

It is the first hike in more than three years and comes just weeks before the US midterm elections, despite repeated demands from US President Donald Trump to lower rates.

“Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Fed said in a statement on Wednesday.

“Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

After Wednesday’s hike, Fed officials expect one more rate increase this year, according to their quarterly projections.

CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 92.3 percent chance of the Fed increasing rates to 3.75 to 4 percent. A week ago, that forecast was a 40 percent chance of a quarter-percent rate increase.

But in the days since, a slew of data shifted those expectations.

For one, consumer prices jumped in August by 0.4 percent, the highest increase in four months. On an annual basis, prices rose 3.4 percent, matching the increase recorded in July, while the job market remains healthy.

Since then, benchmark crude oil prices have continued to soar as strikes in the US-Israel war on Iran have intensified. Brent crude hovered near $109 per barrel on Tuesday.

The average price for a gallon (3.8 litres) of petrol is $4.36, up 14 cents in the past week, and up from $4.06 in the last month, according to the American Automobile Association (AAA), which tracks daily petrol prices.

Diesel, on the other hand, was at $6.31, the highest recorded average and roughly double from a year ago. That, in turn, is expected to further stoke prices as diesel is used in trucks to haul everything from fruits and vegetables to steel and cement.

At the same time, the benchmark 10-year Treasury yield broke above the psychologically important 5 percent threshold on Tuesday, hitting 5.02 percent, its highest level in 19 years. The yield serves as a benchmark for borrowing costs, including car loans and home mortgages, and is a bellwether for inflation.

“The economy is in an unusual place,” Michael Klein, professor of international economic affairs at Tufts University’s Fletcher School and executive editor of EconoFact, a nonpartisan economic and social policy publication, as unemployment remains at a comfortable level while higher prices continue to stick, sending inflation beyond the Fed’s target of 2 percent.

“There [has been] a lot of pressure on Chairman Warsh to raise interest rates because of inflation coming in high, and that has been compounded by concerns about Trump’s pressure” as the president has continued to demand that interest rates be lowered, Klein said.

“Higher interest rates tend to weaken the economy… but if the market believes that there’s going to be a rate increase, it’s priced in already as prices move on news, so this won’t be news,” Klein said, adding that should help steady yields.

Published on
15/09/2026 – 7:51 GMT+2

Government bond markets remain under pressure as rising energy prices revive inflation concerns and increase expectations that major central banks will keep interest rates higher for longer.

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The benchmark 10-year US Treasury yield briefly touched 5.011% on Monday, according to Dow Jones Market Data, before falling back below 5%. The level was the highest since October 2023.

The yield crossed the psychologically important 5% threshold as higher government borrowing, resilient economic growth and heavy corporate debt issuance linked to artificial intelligence investment compounded pressure on US bonds. Yields move inversely to bond prices.

Rising Treasury yields can feed through to mortgages, corporate loans and other forms of credit, potentially slowing economic growth. They can also make bonds more attractive relative to highly valued equities.

The latest rise followed the US Treasury’s previously announced expansion of its bond-buyback programme. Last week, it offered to purchase up to $6 billion of debt maturing in 10 to 20 years – three times the previous operation’s size.

The yield on the 30-year US Treasury bond, meanwhile, remained close to its highest level since 2007.

The sell-off has also spread across Europe. France’s 10-year government bond yield rose to 4.50% on Monday, while the equivalent Italian yield reached around 4.40%.

Germany’s benchmark 10-year Bund yield climbed as high as 3.538%, according to Dow Jones Market Data, its highest level in 15 years.

Energy prices are a major source of pressure. Brent crude rose to around $107 a barrel on Tuesday morning, while US West Texas Intermediate traded close to $103, as attacks on Saudi energy infrastructure and shipping in the Gulf intensified concerns about supplies through the Strait of Hormuz.

The European Central Bank raised its deposit rate by 25 basis points to 2.5% last week and warned that inflation could remain above its target for an extended period. Markets are pricing in at least one further ECB increase this year.

Attention now turns to three major central-bank decisions. The US Federal Reserve announces its decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.

A Reuters poll found that 85% of economists expected the Fed to raise rates by 25 basis points, while money markets placed the probability of an increase at around 93%.

The BoE is widely expected to leave rates unchanged. Economists surveyed by Reuters unanimously forecast no change, although some analysts have warned that a surprise increase cannot be ruled out. The BoJ is widely expected to raise borrowing costs.

RIYADH: Saudi Arabia’s inflation held at 1.8 percent in August for the fourth-straight month, as housing, food and transport costs continued to drive consumer prices higher, official data showed. 

The annual increase matched July’s reading, while the Consumer Price Index rose 0.1 percent from the previous month, according to data from the General Authority for Statistics. 

This increase was mainly driven by a rise in housing, water, electricity, gas, and other fuel prices by 3.9 percent, food and beverage prices by 1.4 percent, and transport prices by 2 percent, the report added. 

Saudi Arabia’s inflation remains relatively subdued compared with some regional peers.

Oman’s rate accelerated to 3.4 percent in August, driven by an 8.5 percent increase in transport costs and a 7 percent rise in food and non-alcoholic beverages, while inflation averaged 2.9 percent in the first eight months.

Jordan’s inflation stood at 2.66 percent in August, taking the average for the first eight months to 2.20 percent.  

This comes as Kamco Invest said in a report last month that regional tensions could fuel inflation by pushing up oil prices and disrupting fertilizer exports, although inflation across the Gulf Cooperation Council remained subdued in June and July. 

In its latest report, GASTAT stated: “The housing, water, electricity, gas and other fuels division was the main contributor to the annual inflation with a contribution of 0.8 percentage points, followed by the food and beverages division with a contribution of 0.3 percentage points, in addition to the transport division with a contribution of 0.3 percentage points.” 

Since housing remains the single largest driver of Saudi CPI, authorities have leaned heavily on real estate interventions to keep it in check. A five-year freeze of annual rent increases for new and existing residential and commercial contracts within Riyadh’s urban boundaries took effect in September last year. 

Housing and personal care lead gains 

The housing, water, electricity, gas and other fuels division rose 3.9 percent year on year, largely due to a 3.9 percent increase in actual rents.  

The personal care, social protection and other goods and services division followed with a 3.5 percent annual rise, pushed up by a 13.3 percent jump in other personal effects, itself driven by a 14.4 percent surge in jewelry and watch prices.  

Recreation, sport and culture climbed 2.8 percent, helped by a 4.7 percent rise in holiday package prices. 

On the downside, furniture, home appliances and routine home maintenance fell 0.6 percent, while clothing and footwear slipped 0.5 percent. 

Monthly movements mixed  

On a monthly basis, personal care, social protection and other goods and services rose 0.8 percent in August, transport gained 0.6 percent, and insurance and financial services rose 0.5 percent.  

Housing costs edged up 0.2 percent on a 0.2 percent rise in actual rents. Food and beverages slipped 0.1 percent, while restaurants and accommodation services fell 0.4 percent, the steepest monthly decline among divisions. 

Average prices show sharp swings 

A separate GASTAT report on average prices of goods and services showed some of the sharpest monthly moves came from fresh produce and construction inputs.  

Local onions posted the largest monthly gain of any tracked item, up 17.9 percent, followed by imported onions at 11.6 percent, medium local potatoes at 7 percent, and local zucchini at 6.7 percent.  

Hotel accommodation rose 2.5 percent, while furnished apartments increased 2.8 percent on the month.  

On the other side, local tomatoes recorded the steepest monthly drop at 15.2 percent, followed by imported tomatoes down 9.3 percent and medium African lemons down 9.2 percent.  

Among construction materials, national reinforcing iron of various diameters fell between 1 and 2 percent month on month, while national electrical cables and wires rose broadly, led by a 25.7 percent annual increase in 35mm cables. 

Wholesale Price Index 

Saudi Arabia’s Wholesale Price Index stood at 4.6 percent in August, down from 5 percent in July, GASTAT said.  

This was driven mainly by an 8.2 percent jump in other transportable goods, excluding metal products, machinery and equipment, on the back of a 51.4 percent surge in basic chemical prices and a 4 percent rise in refined petroleum product prices.  

Metal products, machinery and equipment prices rose 2.2 percent annually, while agriculture and fishery products increased 4.8 percent. Ores and minerals prices fell 1.8 percent. 

“On a monthly basis, the WPI recorded a decline of 0.2 percent in August compared to July 2026,” the report noted, weighed down by a 1 percent drop in other transportable goods and a 2 percent fall in ores and minerals, even as metal products, machinery and equipment rose 0.8 percent and food, beverages, tobacco and textiles gained 0.6 percent. 

Producer Price Index 

Separately, Saudi Arabia’s Producer Price Index for July — the most recent data available — recorded a 5.3 percent annual increase compared with July 2025, according to GASTAT.  

The rise was driven by a 5.5 percent increase in manufacturing prices, a 2.3 percent rise in electricity, gas, steam and air-conditioning supply prices, and a 6.8 percent increase in water supply, sewerage and waste management activity prices. 

Within manufacturing, prices for chemicals and chemical products jumped 13.1 percent annually, wearing apparel rose 12.9 percent, and basic metals climbed 8.8 percent.  

On a monthly basis, however, the PPI fell 2.8 percent in July compared with June, mainly on a 3.0 percent decline in manufacturing prices, led by a 6.8 percent drop in refined petroleum product prices. 

Published on
11/09/2026 – 15:25 GMT+2

The last major data point before the Fed meets has arrived, and it arrived while Americans were paying record prices at the pump.

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The US Bureau of Labor Statistics reported on Friday afternoon that the annual rate held steady, with core inflation, which strips out food and energy, easing to 2.4% from 2.5%.

Every figure matched the consensus of economists and the monthly number is where the pressure shows.

Prices rose 0.4% in August against 0.1% in July, a fourfold acceleration and the fastest pace in three months. The annual rate stayed flat only because it is measured against the strong summer of 2025.

What it means for the Fed meeting

Markets had largely made up their minds before the figures landed.

CME’s FedWatch tool put the probability of a quarter-point increase at the 16 September meeting at 67.4%, up sharply from around 40% before Chairman Warsh’s Jackson Hole address in late August.

Following the inflation data release, those odds moved to 91.6%.

Warsh’s first keynote as chair was the turning point as he argued the American economy had strengthened rather than weakened, that the labour market was consistent with full employment, and that he “would be hard pressed to describe broad financial conditions as restrictive.”

On inflation Warsh was blunt by stating that “we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

By that test, Friday’s numbers are ambiguous.

Core inflation has now fallen for a second month and sits within half a point of the 2% target, which is underlying inflation moving in the right direction. The monthly acceleration points the other way.

Warsh also refused to say what would trigger a move, rejecting forward guidance as a practice that “has overstayed its welcome”. The Fed has held its benchmark rate at 3.50% to 3.75% since December, though three regional presidents dissented in July in favour of an increase, the most in one direction since 2016.

A fuel shock with no obvious end

The pressure is coming from energy, and it is intensifying.

US crude futures topped $100 a barrel this week as fighting between American and Iranian forces escalated around the Strait of Hormuz, with Washington striking five Iranian tankers after attempted missile attacks on a US Navy warship.

Diesel is where it bites hardest.

The US national average crossed $6 a gallon on Friday for the first time in the country’s history, at least in nominal terms, according to the American Automobile Association, and leaving truckers and farmers paying around 63% more than a year ago.

In California the average is close to $8. As for petrol, it is averaging $4.22 nationwide, against $2.98 before the war began.

Ukraine’s strikes on Russian refineries prompted Moscow to ban diesel exports, removing roughly 800,000 barrels a day, while disruption around Hormuz has cost another 1.2 million.

Refineries representing about 5 million barrels a day of capacity have been shut by the two wars, and close to 8% of global diesel supply is currently disrupted.

Some retailers have already added delivery surcharges, and the effect on grocery prices tends to arrive with a lag, which means the energy shock in Friday’s numbers may not yet be the whole of it.

Prices spiked as attacks on oil tankers escalated in the Middle East.

Oil prices have increased by four percent, with benchmark Brent crude hitting $105 a barrel after the biggest rise in attacks on shipping since the Iran war began spurred trader concerns about further supply disruptions.

Brent crude futures were up $4.05, or four percent, at $105.26 a barrel by 1215 GMT on Thursday. United States oil topped $100 a barrel for the first time since May, as West Texas Intermediate crude futures CLc1 rose $3.99, or 4.15 percent, to $100.04.

Brent prices have surged by more than 30 percent from lows touched in early August, as a permanent agreement between the US and Iran to cease attacks never materialised and fighting resumed.

Iran-aligned Houthis seized control of Yemen’s port of Mocha on Thursday, further threatening Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.

“The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” PVM analyst John Evans said.

Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.

While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.

Chinese demand

China, the world’s largest crude importer, has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note.

If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains, ING said.

“For months, the bearish case rested on soft Chinese demand,” said David Jorbenaze, global oil market lead at commodities information provider, ICIS.

Rising oil prices have worsened worries about inflation and cranked up pressure within the bond market, helping to lower stocks again on Wall Street.

The S&P 500 fell 0.6 percent and is on track for a fourth straight loss.

The increase in oil prices has pushed the price for a gallon of regular petrol to an average of nearly $4.28 across the US, according to the American Automobile Association. That is not only costing more at the pump but also through higher prices for all kinds of products that move by truck to store shelves.

Following Thursday’s reports, traders are betting on a close to 70 percent chance the Fed will raise the federal funds rate at its meeting next week. That’s up from the 61 percent probability seen the day before, according to data from CME Group. That’s also despite President Donald Trump’s consistent lobbying for interest rates to go lower rather than higher.

Frankfurt has tightened again.

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The European Central Bank’s governing council lifted the deposit facility rate from 2.25% to 2.5% on Thursday. It is the second hike since 11 June, when the ECB moved for the first time in three years.

The ECB sets monetary policy for the eurozone through three key interest rates, with the deposit facility rate serving as its main policy benchmark.

The main refinancing rate was lifted to 2.65% and the marginal lending facility to 2.9%.

In its statement, the central bank noted that “the conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period,” while ensuring that “with today’s decision, the Governing Council remains well positioned to navigate the uncertainty caused by the conflict.”

The ECB staff projections continue to estimate that headline inflation will average 3% this year. However, it has revised up the expectations for 2027 and 2028 to 2.5% and 2.1% respectively, compared with June.

An energy problem, not a demand problem

The decision follows an August inflation reading of 3.3%, up from 2.9% in July and the highest since September 2023.

Energy costs did nearly all the work, with energy inflation jumping to 14.3% from 10.3%, as fighting around the Strait of Hormuz kept crude supply constrained. The problem persists as Brent crude crossed $100 a barrel again on Wednesday due to renewed exchanges of fire between the US and Iran.

Underneath, the picture is calmer.

Core inflation, which strips out energy, food, alcohol and tobacco, actually fell to 2.4% from 2.5% in August, while services inflation, the component most sensitive to wages, dropped to 3% from 3.3%. There is still little sign that expensive energy is spreading into the rest of the economy.

That distinction has been central to the ECB’s own thinking.

In a paper published earlier this month, its economists found that adverse energy supply factors accounted for around 90% of the rise in energy inflation between January and May of this year.

“This time the energy supply shock dominates, while demand and public policy stimulus have minor roles,” the economists wrote, contrasting it with the 2021-22 surge that prompted a far more aggressive response.

A single rate for very different economies

The eurozone inflation average conceals a wide spread.

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 markedly different outcomes.

Growth complicates matters further.

The bloc has held up better than expected, but resilience is not overheating, and even at 2.5% the deposit rate remains within the range the ECB considers neutral. Going further would mean deciding that policy must actively restrain the economy.

Christine Lagarde had signalled this move in July, when the council held rates but instructed staff to model oil and gas scenarios ahead of September.

“The burden of proof is on data,” Lagarde said then, adding that “the full inflationary impact of the energy shock has yet to play out.”

Thursday’s decision comes alongside fresh staff projections, though their cut-off date falls roughly two weeks before the meeting, meaning neither the latest leg higher in oil nor the surge in European government bond yields to 15-year highs will be reflected.

Attention now turns to Frankfurt’s peers.

The Federal Reserve will announce on 16 September and the Bank of Japan on the 18, with both expected to consider hikes of their own.

Meanwhile, the Bank of England will decide on 17 September and is expected to hold rates as it currently maintains a much higher benchmark than the rest at 3.75%.

RIYADH: Egypt’s annual nationwide inflation rate eased to 12.7 percent in August from 13 percent in the previous month, as lower food prices offset increases in electricity, housing and other household costs.

The nationwide consumer price index was unchanged from July at 289.8 points, according to data from the Central Agency for Public Mobilization and Statistics. Annual urban inflation also eased to 14.5 percent from 14.9 percent in July. 

Egypt continued to experience faster price growth than several regional peers, although the latest available comparative readings are for July rather than August. 

Saudi Arabia’s annual inflation was 1.8 percent in July, while Jordan’s was 2.7 percent, according to official data from the respective countries. Morocco recorded a 0.6 percent annual decline in consumer prices.  

The International Monetary Fund expects Egypt’s inflation to rise to 16.7 percent in the second half of 2026, reflecting higher energy prices, exchange-rate depreciation and unfavorable base effects. 

In its latest report, CAPMAS stated: “The food and beverages division recorded a decrease of 1.2 percent due to a 0.1 percent decrease in the prices of cereals and bread, a 1.5 percent decrease in the prices of meat and poultry, a 0.1 percent decrease in the prices of fish and seafood, and a 7 percent decrease in the prices of vegetables.”  

Housing costs climb  

Housing, water, electricity, gas and other fuels rose 1.9 percent during the month. Electricity, gas and fuel prices increased 4.3 percent, while actual rents rose 0.8 percent and housing maintenance costs increased 0.5 percent.  

Prices for furnishings and household equipment rose 0.7 percent, while clothing increased 0.5 percent, healthcare 0.4 percent, transport 0.2 percent, and restaurants and hotels 0.5 percent. 

On an annual basis, housing, water, electricity, gas and other fuels recorded the largest increase, at 33 percent, with actual rents up 28 percent and electricity, gas and fuels rising 22.4 percent. 

Transport costs increased 21.7 percent annually, while education rose 20 percent and recreation and culture increased 15.3 percent. Food and beverages prices rose 6.5 percent, with vegetable prices up 27.7 percent.  

Monetary policy  

The inflation data comes after the Central Bank of Egypt kept its key interest rates unchanged last month, with the overnight deposit rate at 19 percent and the lending rate at 20 percent. The main operation and discount rates were maintained at 19.5 percent. 

The CBE expects headline inflation to accelerate through the third quarter because of unfavorable base effects before gradually declining from the first quarter of 2027. It expects inflation to converge toward its 7 percent target, plus or minus 2 percentage points, during the second half of 2027.  

The central bank has warned that the inflation outlook remains exposed to risks from regional hostilities and a stronger-than-expected pass-through from fiscal consolidation measures. 

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.

Critics argue that the administration’s arcade games prioritise entertainment over pressing issues like rising costs and foreign conflicts.

The White House’s unveiling of five arcade-style games on its website, each believed to be promoting a different policy of United States President Donald Trump’s agenda, has ignited backlash, with critics accusing the administration of prioritising entertainment over addressing rising living costs and the ongoing war on Iran.

Announced on Thursday, the games include “Build the Wall” where players run to capture little green figures before they reach a border wall; “Rio Run”, a Snake-style game in which players gather border crossers along a fence; “Supply Line”, in which players reject food items that fail to meet “Make America Healthy Again” standards; “Flappy Bill,” a Flappy Bird-style game in which a bald eagle carries legislation over the National Mall; and “Trump Savings Tycoon”, in which players catch flying cash and gold bars to “fill your kids’ Trump Accounts,” in reference to the administration’s child savings programme.

“Heating oil is near an all-time high but hey you can play Border Czar Tom Homan in a video game,” Senator Matt Lesser wrote on X.

Rights groups have also criticised the administration for the gaming website.

“Makes me sick. They’ve been playing games with people’s lives for years, now they’ve made a video game of what they’re doing,” Amerika Garcia Grewal, co-director of the Frontera Federation in Eagle Pass, Texas, told AFP news agency.

The game designers “have lost touch with what it means to be human and care for others”.

Adriana Jasso, programme coordinator for AMIGOS San Diego Community, who works at the border, said the arcade-style games showed a fundamental “lack of seriousness” from the administration.

“The cruelty, the extremity of the administration … is no longer surprising,” she said.

In recent months, Trump has faced mounting criticism over the economic toll of the war on Iran and his broader domestic agenda.

The conflict has kept the Strait of Hormuz closed for nearly six months, disrupting global supplies of oil and natural gas and fertiliser, and pushing US inflation above the Federal Reserve’s 2-percent target, according to reporting by Texas Public Radio.

Trump has also faced criticism over tariff policies that the Supreme Court partly struck down earlier this year, along with cuts to food assistance programmes and the expiration of Affordable Care Act tax credits, all of which economists say have compounded the squeeze on household budgets.

The White House, meanwhile, appeared unfazed, posting “CAN’T STOP WINNING” on X alongside a link to the games.

Borrowing costs across some of Europe’s biggest economies have surged to their highest levels in more than 15 years, as a renewed sell-off in global bond markets gathers pace.

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The global bond rout pushed Germany’s benchmark borrowing costs to a 15-year high on Tuesday, with France, Italy and the Netherlands all seeing similarly steep rises.

Germany’s 10-year Bund climbed above 3.36% on Tuesday, according to Trading Economics. Later, the yield went down a bit and traded at around 3.34%.

Bond yields move inversely to prices. When investors sell bonds, prices fall, and because a bond’s fixed interest payment becomes worth more relative to that lower price, the effective yield rises.

In short — the more bonds get sold, the more it costs governments to borrow.

Sovereign debt came under renewed pressure as rising oil prices and increasingly hawkish signals from major central banks reinforced bets that interest rates will stay higher for longer.

The yield on Germany’s 30-year Bund surged above 3.84%, also its highest level since 2011. The French 10-year OAT yield rose to its highest level since November 2008, trading slightly above 4.215% at around 10.45 CEST on Tuesday. The equivalent Italian yield was trading slightly lower at 4.188 at the same time.

At the same time, the Dutch 10-year government bond yield increased to 3.43%, its highest level since May 2011. Spain’s 10-year yield climbed above 3.80%, its highest level since November 2023.

Investors are concerned that rising energy prices will fuel inflation around the world, potentially prompting interest-rate increases by central banks in the US, Japan and the eurozone, among others.

These concerns were reinforced in the eurozone on Tuesday morning, as the latest flash inflation data from Eurostat showed that energy prices were 14.3% higher than a year earlier. This helped push eurozone inflation to 3.3% in August, up from 2.9% in July. This is significantly above the ECB’s 2% target.

The central bank is due to hold its next monetary policy meeting next week, and most investors are betting on a 25-basis-point rate hike.

Leo Barincou, senior economist at Oxford Economics, said: “With inflation still accelerating, the ECB is all but certain to hike at next week’s meeting, in line with our expectations.”

Looking at the largest European economies, analysts say Germany’s Bund has moved largely in line with global benchmarks, while France faces an additional risk premium because of its political and fiscal outlook.

French 10-year borrowing costs have exceeded Italy’s for much of the summer, as France increasingly replaces Italy as the main focus of European debt concerns.

According to the IMF, France’s gross government debt is projected to reach 118.4% of GDP this year and 120.5% in 2027. France currently has the third-highest debt-to-GDP ratio in the EU, after Greece and Italy.

The Banque de France expects the budget deficit to reach 5.2% of GDP this year. Difficult budget negotiations ahead of the 2027 presidential election have raised doubts about the government’s ability to reverse this trend.

Robert Timper, BCA’s chief fixed-income strategist, previously told Euronews Business: “We have held the view for some time that France is the country in the euro area with the most unsustainable fiscal outlook, and its borrowing cost should reflect that.”

“To get back to a sustainable fiscal path, France needs to do substantial reforms, which will be unpopular as they will curtail welfare spending,” Timper said. “A large political majority is therefore necessary for such reforms, or a bond market riot will force reforms.”

Global bond sell-off

Expectations of persistently high inflation and rising borrowing costs also pushed the yield on 10-year US Treasuries to its highest level since January 2025. The yield on the 10-year Treasury was trading at around 4.78% on Tuesday.

In the US, higher energy prices have added to already stubborn inflation, which remains well above the Federal Reserve’s 2% target. Inflation has weighed on household spending and consumer confidence, complicating the Fed’s decisions on interest rates.

According to Bloomberg, traders raised the probability of a September US rate hike to about 70%, extending a repricing that began last week when Federal Reserve Chair Kevin Warsh doubled down on a pledge to tame inflation.

The sell-off also spread to Asia, where Japan’s benchmark 10-year government bond yield reached 3.00% for the first time since 1996.

Government bonds have traditionally been seen as safe-haven assets during periods of uncertainty.

That role is being tested as investors become increasingly concerned that global conflicts and higher energy prices could produce a prolonged period of stagflation — a combination of high inflation and weak or zero economic growth.