The House View: A broadening tightening cycle

The theme of global economic resilience has shown little sign of fading this year, despite the ongoing conflict in the Middle East. Indeed, we now expect global growth of 3.3% in 2026, as the powerful combination of AI-driven investment and strong corporate earnings continues to support activity. Nevertheless, recent months have seen a clear re-emergence of inflationary pressures. Rising energy costs, the capital demands of AI, sustained fiscal expansion and higher defence spending have all placed upward pressure on prices, pushing yields higher across the major economies. In response, global central banks have returned to a synchronised tightening cycle, with the Fed, ECB and BoJ all raising rates once again;