Central Banks Face Tightening Options Amid Strong Jobs Report and High Oil Prices

The jobs report in the US was stronger than expected, with nonfarm payrolls increasing by 162,000 and unemployment remaining at 4.1%.

This has made a September rate hike easier to justify for the Federal Reserve, particularly with services inflation and oil prices still running high.

The labour market is no longer giving the Fed a strong reason to rush into lower rates.

The upcoming CPI and PPI data will be closely watched as it could reinforce the case for tighter policy if there are strong inflation readings alongside the jobs report.

The European Central Bank (ECB) is widely expected to raise interest rates by 25 basis points in September, with the bigger issue being whether it stops there.

Isabel Schnabel has argued that policy may still need to become tighter because inflation could remain above target for longer than expected.