Report published September 25, 2026

Bank of America Global Economic Weekly: Divided Nations (September 2026)

Bank of America · September 25, 2026

BofA incorporates higher oil and gas projections into its European forecasts, penciling in an ECB hike in December 2026 and two BoE hikes by February 2027, while arguing that markets are overpricing European rate hikes relative to the US. In the US, September payroll growth is forecasted to slow to 60k purely due to seasonal adjustment payback, keeping the Fed on track to hike in October and December.

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Finvaulta summarizes Bank of America's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.

Key Takeaways

1.BofA adds rate hikes to European central banks (ECB in Dec-26 to 2.75%; BoE in Nov-26 and Feb-27 to 4.25%) driven by elevated winter energy prices, but maintains high conviction that markets are overpricing European hikes relative to the US.
2.The US labor market shows an expected headline September payroll slowdown to 60k driven by calendar and seasonal payback rather than underlying deterioration, while Fed Chair Warsh's hawkish stance shifts policy focus to upcoming CPI data.
3.Japan's capex boom is being absorbed primarily by price deflators (+17% from 1Q22 to 2Q26) rather than real volume expansion, driven by yen depreciation on imported machinery and domestic capacity bottlenecks in construction.

Global Letter
Deal or no deal?
The selloff awakens again
US
Euro area
UK
Japan
Emerging EMEA
Latin America
Key forecasts
Detailed forecasts
Monetary policy forecasts
FX, rates and commodity forecasts

Report data

Exhibit 1: We continue to think that the market is overpricing rate hikes in Europe vs the US

Metric	Estimate	Context
Euro Area Headline CPI Inflation Forecast	3.0%	Lifted due to higher winter energy price projections before dipping to 2.5% in 2027.
UK Headline CPI Inflation Peak	4.2%	Expected peak in UK CPI driven by higher oil and wholesale gas price assumptions.
US Nonfarm Payrolls Forecast	60 thousand	Below-consensus expectation driven by payback from August seasonal factors.
SARB Repo Rate	7.25%	South African Reserve Bank increased the repo rate unanimously by 25bp.
Colombia Central Government Primary Deficit Forecast	2.5 % of GDP	Revised down in response to the ADLE government's proposed fiscal rescue law.

Source: BofA Global Research; ONS, BofA Global Research; SARB. This is a dated model snapshot, not a live forecast.

Reports in this series

Global Economic Weekly is shown in chronological order through this edition, published on September 25, 2026.

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Authors / Editors

Claudio IrigoyenAntonio GabrielShruti MishraRuben Segura-CayuelaEvelyn HerrmannChiara AngeloniSonali PunhaniIzumi DevalierTakayasu KudoTatonga RusikeCarlos Capistran