Capital Economics economist Neil Shearing said in a note markets price just over 50bps of tightening for the Fed, the Bank of England and the European Central Bank by mid-2027, but policy paths could start to diverge as soon as next year. He said an end to the Iran conflict would likely push energy prices lower, leaving domestic fundamentals as the main driver of policy; underlying inflation pressures in the UK and euro area are weak, while the US faces a stronger inflation backdrop and fiscal p

Capital Economics economist Neil Shearing said in a note markets price just over 50bps of tightening for the Fed, the Bank of England and the European Central Bank by mid-2027, but policy paths could start to diverge as soon as next year. He said an end to the Iran conflict would likely push energy prices lower, leaving domestic fundamentals as the main driver of policy; underlying inflation pressures in the UK and euro area are weak, while the US faces a stronger inflation backdrop and fiscal policy remains relatively loose. Shearing added it is increasingly hard to justify market-implied tightening for the ECB and BoE, whereas the Fed may resume tightening sooner.