Economists say markets are overpricing future rate increases amid fears the oil shock could worsen after Houthis seized a strategic stretch of Red Sea coastline, a move seen as signalling a more assertive stance by Iran-backed militia

International News via Reuters:

Major central banks are on a tightening path, with the Federal Reserve recalibrating its policy to a more restrictive stance on Wednesday, even as traders continue to price in a more aggressive policy response than projected in the U.S. central bank’s so-called dot plot.

Economists say markets are overpricing future rate increases amid fears the oil shock could worsen after Houthis seized a strategic stretch of Red Sea coastline, a move seen as signalling a more assertive stance by Iran-backed militia.

Here’s where central banks in the Group of 10 developed economies stand, ranked from highest to lowest policy rate.

1/ AUSTRALIA

The Reserve Bank of Australia has hiked interest rates three times this year to 4.35%, entirely undoing last year’s cuts.

The door to another hike looks firmly open, especially after a hot July inflation print. The central bank’s deputy governor said policymakers would debate the case for a hike at their meeting later this month.

Markets are broadly expecting the central bank to hike rates then.

2/ NORWAY

Norway has one of the highest rates in the G10 and is likely nearing the end of its hiking cycle. Norges Bank, which meets on September 24, left rates unchanged at 4.25% in August and noted that inflation had softened.

The economy meanwhile grew at a slower pace than economists had expected in the second quarter, at just 0.3%, while markets price in one more quarter-point hike by year-end.

3/ BRITAIN

The Bank of England on Thursday kept rates steady, as expected, at 3.75%. Three of the rate setters voted for a hike — the same number as at the central bank’s previous meeting.

But policymakers also sounded the alarm on inflation, with Governor Andrew Bailey warning that prolonged conflict in the Middle East may require tighter policy.

Markets were last pricing in at least one rate hike from the BoE this year with a chance of another.

4/ UNITED STATES

The Fed raised rates and flagged more hikes in a move that soothed concerns about the central bank’s independence in the face of President Donald Trump’s demands for lower rates.

Without that clear signal, investors may have questioned whether a Kevin Warsh-led Fed would remain committed to taming inflation, potentially weighing on US assets.

However, while policymakers project one more rate hike in 2026 and a hold in 2027, traders are pricing in more than one increase this year and roughly three moves by the end of 2027.

5/ NEW ZEALAND

The Reserve Bank of New Zealand hiked rates for the second consecutive meeting to 2.75% earlier this month, as expected. But it also hinted that more tightening would likely be measured as risks to the economic outlook grow.

The latest economic growth data meanwhile came in above expectations, signaling resilience. Markets are pricing in at least one more hike by year-end.

6/ EURO ZONE

The European Central Bank raised rates for the second time this year earlier this month and struck a hawkish tone as energy prices rise.

Markets price in at least one further hike by year-end and a deposit rate above 3% in 2027. But some economists expect the energy shock to weigh on economic growth and help curb inflationary pressures into next year.

7/ CANADA

The Bank of Canada left rates on hold earlier this month, but Governor Tiff Macklem said it could raise rates multiple times if inflation remained elevated.

That marked a departure from his previous messaging that upside risks to inflation and downside risks to growth were broadly balanced.

Since then, signs of a cooling labour market have emerged and trade tensions with the United States cloud the economic outlook. Still, markets price in another hike by year-end.

8/ SWEDEN

Sweden’s Riksbank is in the dovish camp and expected to keep its key policy rate at 1.75% when it meets later this month.

August inflation figures came in below expectations, cementing that view.

Still, markets expect rates to rise later this year.

9/ JAPAN

The Bank of Japan hiked rates to a 31-year high of 1.25%, as expected, on Friday and signalled it was ready to continue raising borrowing costs as it warned of broadening price pressures.

Even so, the BOJ’s guidance was not understood as explicitly hawkish by markets, and there were two dovish dissenters, keeping investors on edge about the possible rate path ahead.

Markets were last pricing in a high chance of one more rate hike from the BOJ this year.

10/ SWITZERLAND

Markets expect the Swiss National Bank to hold its key rate at 0% when it meets on September 24 and leave it there well into next year.

Data showing a rise in consumer prices and strong economic growth have raised the prospect of an earlier move. Still, a strong Swiss franc has helped dampen inflation, reducing the need for tightening.

Reporting by Stefano Rebaudo in Milan and Sophie Kiderlin in London; Editing by Dhara Ranasinghe, Joe Bavier and Chizu Nomiyama

Those who escaped last month’s disaster, when a torrent of mud and rocks swept across the Nepal-China border area, have been returning to see what they can recover

International News via Reuters:

Anusa Thapa Magar rushed home from her job in the Maldives after hearing about Nepal’s devastating floods, hoping that her beloved grandmother was one of those who survived.

She headed for the family’s two-storey house in the small town of Betrawati.

But there was no house, and no Betrawati.

Those who escaped last month’s disaster, when a torrent of mud and rocks swept across the Nepal-China border area, have been returning to see what they can recover. In some cases, all they have found is a flat expanse of grey silt.

Standing on the hardened mud, the 23-year-old Magar wondered whether her grandmother, who could barely walk, was beneath the ground. “Aama” — mother, in Nepalese — was last seen resting on her bed.

“If my house is buried underneath, that means my Aama is still here underneath too, right?” said Magar.

Each day, scores of survivors sheltering in clusters of tents on a hillside above the site of Betrawati walk the half a kilometre (500 yards) to wander across the wasteland that was once their town, searching for traces of homes, shops and loved ones swallowed by the floods.

There are 5,130 people still reported missing on the Nepal side of the border after the flood caused by a glacial collapse that swept down the mountains, killing at least 1,386 people. The authorities continue to search for survivors, but it has been days since anyone has been found alive.

A TRAIL OF PANIC

The highway linking Bidur to Betrawati has been replaced by a thick layer of mud deposited by the flood-swollen river.

Reaching Betrawati now requires climbing a steep hillside, traversing a narrow ridge and then descending into what had been a bustling settlement.

Along the way lie abandoned shoes and slippers, silent evidence of the panic that unfolded as people scrambled to escape the torrent of water, mud and rock. A deserted school building stands half-buried in debris. Further up the trail, children’s shoes, school ties, and backpacks are scattered across the mud.

The floodwaters surged downstream with such force that they slammed into the base of a hill before rebounding across the valley, sweeping away everything in their path.

Betrawati residents said warnings about the approaching flood began circulating minutes before it arrived, as friends and relatives upstream phoned to alert them. But few grasped the speed or scale of what was coming.

Garment business owner Kalpana Thapa Magar, 43, recalled receiving a call from a friend, telling her: “Run! Run!”

“I just ran. When I looked back, everything was gone, even the people who had been running behind me,” she said.

In Devighat, downstream, partial shells of houses still stand. Residents have been salvaging what belongings they can, though many say they will have no reason to return again.

Madhav Ghimire, 42, carries the keys to the six-room house he shared with Ambika Aryal, 38, but the landscape has changed so dramatically that they can no longer identify where it stood.

“Though I lost everything, I have still carried the keys of my home. It gives me a sense that I have everything,” he said.

LOST EVERYTHING

For many families in the region, it was not the first disaster they had endured. Nearly 9,000 people were killed in Nepal’s 2015 earthquake.

Teacher Sita Thapa Magar, 45, Kalpana’s older sister, said the earthquake had brought hardship and loss, but families had at least been able to salvage belongings and rebuild on their land. This time, the two houses she owned with her husband had been swept away and their farmland buried under debris.

“This time, we have lost everything,” she said.

Shanti Dangol, 61, stood on a single broken tile, the only visible trace of her home, holding a photograph of the three-storey lodge that once stood there. 

She described Betrawati as a once-thriving town that catered to pilgrims and trekkers and had grown more prosperous in recent years as families built larger homes, rented rooms and invested in their children’s education.

“Economically, people here had started doing well. Now, nothing remains,” she said.

Photography and reporting by Adnan Abidi and Tyrone Siu; Addtional reporting by Sahana Bajracharya and Thomas Suen; Writing by Aftab Ahmed; Editing by Rosalba O’Brien

Investors withdrew a net $23.21 billion from global equity funds, the biggest weekly outflow since December 17, 2025, LSEG Lipper data showed

International News via Reuters:

Global equity funds recorded their largest weekly outflow in nine months in the week through September 16, as a surge in oil prices heightened inflation concerns and expectations of a Federal Reserve interest-rate increase added to investor caution.

Investors withdrew a net $23.21 billion from global equity funds, the biggest weekly outflow since December 17, 2025, LSEG Lipper data showed.

Crude oil prices climbed to four-month highs during the week, stoking inflation worries and pushing Treasury yields higher, weighing on growth-oriented funds.

The Fed raised interest rates by 25 basis points on Wednesday and indicated that further increases may be needed to curb inflation fueled by higher energy costs linked to the war in Iran.

Investors withdrew a net $31.44 billion from US equity funds, a fourth consecutive week of outflows. During the same period, European equity funds recorded net outflows of $295 million, while Asian funds attracted net inflows of $6.26 billion.

Weekly inflows into equity sector funds climbed to a six-week high of $4.49 billion, led by technology, financials, and consumer discretionary funds, which attracted $1.94 billion, $1.31 billion, and $621 million, respectively.

Global bond funds attracted $855 million in inflows, the smallest weekly amount since April 1.

Investors withdrew $3.85 billion from high-yield bond funds and $1.1 billion from euro-denominated bond funds, while adding $2.96 billion to government bond funds and $1.96 billion to short-term bond funds.

Money market funds recorded outflows of $77.42 billion, ending a two-week streak of net purchases.

Among commodity funds, gold and other precious metals funds attracted $1.17 billion, marking their ninth weekly inflow in the past 10 weeks. Energy funds posted weekly outflows of $148 million, compared with an inflow of $211 million in the previous week.

In emerging markets, equity funds recorded a second consecutive week of outflows, totalling $1.61 billion.

Investors also withdrew $167 million from bond funds following six consecutive weeks of inflows, according to data covering 29,002 funds.

Reporting by Gaurav Dogra; Editing by Harikrishnan Nair

The debate was triggered in late August when the finance ministers of Germany, Spain, Portugal, Italy, Poland and Austria warned that consumers were facing one of the biggest oil supply shocks in decades, fuelling voter discontent over rising living costs

International News via Reuters:

European Union finance ministers will discuss on Friday whether to impose an EU-wide windfall tax on energy companies benefiting from a surge in oil and gas prices following the closure of the Strait of Hormuz, with further talks expected in October.

The debate was triggered in late August when the finance ministers of Germany, Spain, Portugal, Italy, Poland and Austria warned that consumers were facing one of the biggest oil supply shocks in decades, fuelling voter discontent over rising living costs. Parliamentary elections are due next year in France, Italy, Spain, Poland, Greece, Finland, Slovakia and Estonia.

Oil futures have climbed back above $100 a barrel, about 50% higher than before the Iran war, ​as escalating attacks across the Middle East threaten more supply routes. Derivatives markets suggest traders do not expect a near-term drop in prices.

Arriving at a meeting of EU finance ministers in Dublin, German Finance Minister Lars Klingbeil called on the European Commission to propose ways to tax what he called excessive profits of oil companies.

“The Commission has been very reserved on this issue, although several member states have been calling for models to be presented for a long time. This must happen by the next Ecofin (EU finance ministers) meeting in October at the latest, and today I will make that pressure clear again, also on behalf of the others,” Klingbeil said.

“People in our countries can currently see how oil companies are exploiting the situation, overcharging people, and significantly increasing their profits. You can see that very clearly in their balance sheets …. If companies are overcharging in a situation like this, then we must pursue the matter consistently. That is my very clear expectation of the Commission: to present proposals now,” he said.

But EU Economic Commissioner Valdis Dombrovskis said the Commission had no plans for now to propose an EU-wide taxing mechanism, saying that EU countries were in charge of their taxes and free to do as they liked.

“We have been clear that, in a sense, that it is in the hands of member states. Member states can go ahead and take those decisions on taxing of windfall profits. And if necessary, the Commission side are certainly ready to engage in the discussions. At this stage, we are not putting forward an EU-wide proposal, but there is a possibility, certainly, for member states to proceed with this,” Dombrovskis said. 

Reporting by Jan Strupczewski. Additional reporting by Maria Martinez in Berlin and Padraic Halpin in Dublin. Editing by Mark Potter

“I leave in 2027,” Lagarde told Irish national broadcaster RTE in response to a question on rumours of her early resignation that have persisted for most of this year

International News via Reuters:

European Central Bank President Christine Lagarde on Friday kept the door open to leaving her post early, replying “we’ll see” when asked if she would remain in the position until her term ends in October 2027. 

“I leave in 2027,” Lagarde told Irish national broadcaster RTE in response to a question on rumours of her early resignation that have persisted for most of this year.

When asked if that meant October 2027, Lagarde replied: “We’ll see.” 

“What I can tell you at this point is that whatever the time, it will be handled in the most professional way as it should be,” she added. 

Sources told Reuters this week that France would back Dutchman Klaas Knot to succeed Lagarde as part of a bargain in which a French candidate would be picked for chief economist.

Reporting by Padraic Halpin; Editing by Toby Chopra

The leaders of the five countries, among the biggest net contributors to the budget, wrote in a joint op-ed in Politico that EU taxpayers cannot keep paying more to pay for both old and new priorities

International News via Reuters:

Germany, Denmark, Finland, the Netherlands and Austria said on Friday the European Union’s budget for 2028-2034 must be “several hundred billion euros” smaller than the €2 trillion proposed by the European Commission, drawing battle lines before EU budget talks come to a head in the next three months.

The leaders of the five countries, among the biggest net contributors to the budget, wrote in a joint op-ed in Politico that EU taxpayers cannot keep paying more to pay for both old and new priorities.

“It (the budget) is too focused on subsidies and transfers allocated largely in advance, leaving too little room for what Europe urgently needs: common investment in security and defence, competitiveness, innovation, and the fight against irregular migration,” the five leaders said.

Net beneficiaries of the EU budget are concerned that would reduce EU funds for farmers and for equalising standards of living between the poorer and richer regions of Europe — a major political concern before parliamentary elections next year in France, Italy, Spain, Poland, Greece, Finland, Slovakia and Estonia.  

The European Commission has proposed the budget should amount to €2 trillion or 1.26% of EU Gross National Income (GNI), of which some 168 billion, or 0.11% of GNI, is to service the EU’s borrowing for the post-pandemic recovery fund. The five leaders called the proposed nominal increase of around 60% over the 2021-2027 budget “simply not realistic.”

“This is why we call for a balanced cut to the Commission’s proposal of several hundred billioneuros,” they said.

To help find a solution, Spain proposed to change the repayment schedule of part of the EU post-pandemic borrowing, linking it to economic growth and spreading it out over a longer period. This, according to Spanish Economy Minister Carlos Cuerpo, would free up some €70 billion.

“An annual payment of about 0.06% of EU GDP would retire the debt by 2058, the deadline agreed by member states,” Cuerpo said.

EU governments will discuss the next EU budget at summits in October, November and December in an effort to get a deal before the end of the year.

Reporting by Jan Strupczewski; Editing by Toby Chopra