Higher oil prices again, but what next for rates?

In this week’s episode, Imogen Bachra is joined by Stuart Sparks and Giovanni Zanni to discuss what recent events mean for rates markets.

Fresh tensions in the Middle East have pushed oil prices higher once again, forcing markets to reassess the inflation outlook and the likely response from central banks. At the same time, softer-than-expected US inflation data has eased immediate pressure on the Federal Reserve, while political developments in Italy and the UK continue to shape market sentiment.

Key takeaways

* Softer US inflation has significantly reduced expectations of a near-term Fed rate hike.

* The Fed’s policy review task forces could have important long-term implications for inflation targeting and monetary policy.

* Markets are increasingly pricing another ECB hike, although the underlying macro data remains relatively benign.

* The Bank of England continues to prioritise evidence of second-round inflation effects before tightening policy further.

* Renewed geopolitical tensions remain the biggest short-term risk for inflation expectations.

* Political developments in both Italy and the UK continue to influence European bond markets, with fiscal policy likely to become a larger market theme later in the year.

Host: Imogen Bachra, Head of Economics and Markets Strategy

Guests: Giovanni Zanni, Chief Euro Area Economist

Stuart Sparks, Head of US Rate Strategy

This episode was recorded on 16 July 2026.

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