Inflation, Rates and Economic History provide clues on the Outlook

Blain’s Morning Porridge 8th Sept, 2026 “If I was trying to get to there, I would not be starting from here.”The coming year is likely to be shaped by higher inflation from energy and El Nino, rising interest rates, “policy-mistake” risks, and revaluation risks as capital markets adapt to rate normalisation. Looming over it all be political noise. Understanding where we are, how we got here and what happens next will be critical. Key Takeaways:Inflation is likely to remain “elevated” through 2027 – leading to multiple market consequences and revaluation threat.Interest rates will likely stay on a rising path – with elevated “policy-mistake” risk in the UK as inflation and slowing growth collide.The UK’s economic problems are the consequences of long-term economic history and accumulated economic weaknesses resulting from successive government policies.The USA is economically robust but faces threats from Chinese competition in it core hi-value tech markets and the potential of hegemonic decline.Rising US rates may weaken the capital markets that have driven US success, but are more likely to trigger a fundamental reassessment of value – corrective.Trying to sort out broken economies and fractured politics will prove difficult – it may be time to give Neo-Keynesian fiscal polies and investment a try… why not? Nothing else is working.The trajectory of US and UK interest rates is not looking good.You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!