US-Iran Talks Show Signs of Progress but Differences Remain, While Global Central Banks Continue to Monitor Inflation Risks

Daily News

Summary:

The US and Iran may resume talks through mediators over the next two days; Lagarde: Growth remains solid while inflation stays elevated, with policy still on a middle path......

【Highlights】

1. US and Iran may hold talks through mediators over the next two days

2. Iran remains pessimistic about reaching an agreement with the US before the midterm elections

3. Cook: AI-driven productivity gains are unlikely to offset short-term inflation pressures

4. Lagarde: Growth remains solid while inflation stays elevated, with policy still on a middle path

5. ECB leadership set for major reshuffle, with political negotiations drawing attention

6. Ramsden: Rising inflation risks are affecting interest-rate assessments

【Details】

US and Iran May Hold Talks Through Mediators Over the Next Two Days

According to US media reports citing informed officials, Qatari mediators are expected to hold separate meetings in New York with Iranian Foreign Minister Abbas Araghchi and US representatives on September 28 or 29. The talks are expected to focus on Iran’s “seven-day plan” proposed during last week’s United Nations General Assembly, which calls for reopening the Strait of Hormuz within seven days. Araghchi remains in New York after attending the UN General Assembly meetings. It remains unclear who will represent the US side in the talks.

Iran previously proposed that if the US lifts the maritime blockade, removes sanctions on oil sales, and restores a regional ceasefire, Tehran would reopen the Strait of Hormuz within seven days and resume nuclear negotiations. US President Donald Trump confirmed to the media on September 26 that he had rejected Iran’s proposal. On September 27, Trump said he expected the US and Iran to restart negotiations within the following week.

Iran Pessimistic About Reaching Agreement with US Before Midterm Elections

Iranian officials privately believe that the prospects of reaching an agreement with the US before the November 3 midterm elections to end hostilities and reopen the Strait of Hormuz remain slim. Progress in the New York talks has been limited, with concessions on the nuclear issue and the reopening of the Strait of Hormuz remaining the main points of disagreement. Negotiations through intermediaries are continuing, but hopes for a breakthrough in the near term are increasingly fading.

Cook: AI Productivity Gains Unlikely to Offset Short-Term Inflation Pressures

Federal Reserve Governor Lisa Cook said on Monday that the labor market appears to be in good condition, with the unemployment rate trending lower. Other indicators also suggest that the labor market is broadly balanced and gradually improving, allowing the economy to withstand higher interest rates. The timing and scale of future policy adjustments will depend on how the economy responds to existing policy actions, as well as inflation and employment data over the coming months.

The effects of AI infrastructure investment, rising oil prices, and supply chain disruptions related to the Middle East conflict are expected to continue adding pressure to inflation in the coming months. While AI-driven productivity gains may help ease inflationary pressures over the medium term, the impact is unlikely to come quickly enough to offset this year’s inflation pressures. Inflationary effects are spreading from AI-focused sectors into broader areas of the economy.

At present, there is little evidence that AI is reshaping the structure of the labor market. The Fed is closely monitoring the possibility that AI could temporarily increase unemployment. If such a scenario occurs, the Fed’s policy options may be limited, as rate cuts aimed at supporting employment could potentially fuel inflation.

Lagarde: Growth Remains Solid, Inflation Elevated, Policy Still on Middle Path

European Central Bank President Christine Lagarde said on Monday that economic growth has shown broad-based strength across most countries and sectors, a trend expected to continue into the third quarter. Manufacturing activity remains resilient, and labor markets continue to be robust.

Inflation is expected to rise, although there are currently no signs that it is becoming entrenched. The outlook remains highly uncertain. Inflation forecasts for 2027 and 2028 have been revised higher compared with expectations several months ago. Given the scale of the shocks, a measured policy response aimed at controlling inflation remains appropriate, and the ECB continues to follow the “middle path” outlined earlier this year.

ECB Leadership Set for Major Reshuffle, Political Negotiations Draw Attention

The eurozone is expected to appoint a new European Central Bank president next year and could replace up to two-thirds of the six-member Executive Board.

The process involves complex political negotiations among the eurozone’s 21 member states. Executive Board member Isabel Schnabel is set to leave; Chief Economist Philip Lane’s term will end on May 31; and President Christine Lagarde’s term runs until October 31, 2027, although speculation about a possible early departure has persisted, and Lagarde herself has not completely ruled it out.

Executive Board members are appointed by eurozone leaders, typically one at a time. However, with several positions becoming vacant in succession, officials are more likely to negotiate a package deal of appointments. The ECB must maintain political and geographical balance, meaning each appointment can affect others. The process may begin with selecting the next president before addressing the remaining positions. Potential successors to Lagarde include Pablo Hernandez de Cos, General Manager of the Bank for International Settlements, and Klaas Knot, former Governor of the Dutch central bank.

However, ECB appointments are highly political and are often part of broader negotiations among European institutions, meaning additional candidates may emerge. Domestic political factors are also important. France will hold a presidential election next spring, and far-right leader Marine Le Pen is currently leading in opinion polls. This could increase pressure on French President Emmanuel Macron to finalize an ECB appointment agreement before a new French leader takes office.

Ramsden: Rising Inflation Risks Affect Interest-Rate Outlook

Bank of England Deputy Governor Dave Ramsden said on Monday that current inflation levels are higher and may persist for longer. This change has already influenced his assessment of interest rates. Between the Bank of England’s monetary policy meetings from July to September, upside risks to inflation increased, and future meetings will further assess the potential for second-round inflation effects.

It remains uncertain whether energy costs and inflationary pressures are strong enough to justify further rate hikes. The central bank needs to monitor their impact on wage negotiations and corporate pricing behavior. By the November Bank of England meeting, policymakers may receive early signals on the direction of 2027 wage negotiations, with most wage agreements taking effect between March and April of the following year. If inflationary “upside pressures” continue to build, Ramsden said he would be prepared to support further rate increases.

【Today’s Focus】

12:30 (UTC+8) RBA September Interest Rate Decision

13:30 (UTC+8) RBA Governor Michele Bullock Holds Monetary Policy Press Conference

15:00 (UTC+8) Switzerland September KOF Economic Barometer

17:00 (UTC+8) Eurozone September Economic Sentiment Indicator

18:00 (UTC+8) ECB Governing Council Member Nagel Speaks

19:30 (UTC+8) ECB Governing Council Member Escrivá Speaks

20:30 (UTC+8) Canada July Monthly GDP

21:00 (UTC+8) US July FHFA House Price Index MoM

21:15 (UTC+8) ECB Executive Board Member Cipollone Speaks

22:00 (UTC+8) US August JOLTs Job Openings

23:30 (UTC+8) Bank of England Monetary Policy Committee Member Taylor Speaks

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data