Bitunix Analyst:Energy Inflation Forces BOE to Hike—But the AI Sell-Off Weakens US Tightening Bets

BlockBeats news, November 6—Global markets are showing a divergence between monetary policy direction and asset prices. The Bank of England voted 8-1 to hike rates 25 basis points to 4%—its first hike in more than three years. Rising energy prices pushed UK September CPI to 3.5%, and the BOE now projects inflation could reach 4.9% by Q2 2027. That said, this hike does not mean a new tightening cycle has been established—policymakers are still watching whether energy costs will transmit into wages and corporate pricing, and guarding against the risk of weakening demand adding further pressure to the economy.

What the BOE truly worries about is second-round inflation effects. Middle East tensions are pushing Brent crude and natural gas higher, and companies can still absorb part of the shock through long-term contracts, cost hedging, and margin compression—but these buffers may not last. Should energy prices stay elevated for long, costs could eventually be passed through to consumers, forcing the central bank to tighten further. Conversely, if household purchasing power deteriorates first, a hike could aggravate the economic slowdown.

The US market faces a different kind of pressure. Questions over AI capex returns, data center oversight, and the unwind of highly leveraged trades have overlapped, hitting tech and semiconductor sectors hard, with every sector of the S&P 500 closing lower. Capital has rotated into short-term Treasuries and money market funds—with MMF scale climbing to $8.016 trillion, indicating that investors are raising liquidity and defensive allocation.

Notably, the tech sell-off has also lowered market bets on a Fed hike in December—reflecting that financial market tightening itself may reduce the need for further hikes. Ahead, the key is not just whether inflation persists, but whether energy costs can translate into broad price pressure, and whether an AI investment cooldown will further hit corporate financing and employment. Global central banks are no longer just facing the challenge of controlling inflation—they are also trying to prevent tightening and a growth slowdown from reinforcing each other.