Subran sees sticky U.S. inflation despite softer payroll signals
According to a report relayed by ChainCatcher and attributed to Jin10, Allianz chief economist Ludovic Subran said the latest U.S. nonfarm payrolls figures were actually weak beneath the surface. Even so, he does not believe that softer labor data is enough to change the broader inflation picture. His base case remains that U.S. inflation will peak above 3.7%, suggesting that price pressures are still persistent enough to keep the Federal Reserve on alert.
Subran pointed to several forces that continue to support U.S. growth. In particular, he highlighted artificial intelligence, fiscal stimulus, and the energy industry as ongoing drivers of economic activity. In his framework, those supports help explain why the economy may remain resilient even when some headline employment indicators lose momentum. As a result, he said the Fed may still have to raise rates again in September.
For market participants, the significance of this view is not just the inflation number itself, but the policy implications behind it. If inflation remains sticky while growth support persists, the Fed’s tightening bias may remain in place longer than some investors expect. That matters across macro-linked markets, including digital assets, because policy expectations continue to shape liquidity conditions, rate-sensitive positioning, and overall risk appetite.
The real divergence, in his view, is between the U.S. and Europe
Subran said this is where the real divergence between the United States and Europe now sits. His argument is straightforward: the U.S. may still be in a position where another hike is necessary, while Europe appears much closer to a pause. That contrast reflects different inflation dynamics, different growth backdrops, and different policy tolerances on each side of the Atlantic.
In practical terms, his comments suggest that weaker U.S. payroll data should not automatically be read as a signal that the Fed is done. Instead, the inflation path remains the dominant variable. By contrast, Europe may no longer face the same urgency to continue tightening. This divergence is especially relevant for macro traders watching the dollar, rate spreads, and global liquidity transmission into risk assets.
ECB unlikely to move again after last month’s hike
On the European Central Bank, Subran took a more restrained view. He said the ECB is unlikely to act again after its rate increase last month. He described that move as an “insurance hike”, implying that it was meant more as a precautionary step than the start of a fresh tightening sequence.
He added that, based on the data currently available, that phase now appears to be behind policymakers. In other words, the rationale for another immediate move from the ECB looks weaker than it did before. This stands in contrast to his assessment of the Federal Reserve, where he still sees a realistic case for one more increase if inflation proves difficult to bring down.
That distinction reinforces his broader theme of policy separation: the Fed may still be leaning toward additional restraint, while the ECB is closer to standing still and reassessing incoming data. For markets, the message is less about a dramatic policy shift and more about the asymmetry in central bank reaction functions.
War-related economic scars remain, but conditions have improved
Subran also addressed the lagged economic impact of war. He said the traumatic effects of war take time to show up fully in economic data, and that the economy is still paying the cost of that conflict. At the same time, he noted that the current situation is better than it was a few weeks ago, indicating that conditions have improved even if the damage has not completely faded.
This framing suggests that geopolitical shocks remain an active macro variable, but not necessarily one that is intensifying in the immediate term. The cost burden is still present, yet the direction of travel appears less negative than before. For cross-market participants, that distinction matters because it affects how geopolitical risk is incorporated into inflation expectations, growth assumptions, and central bank reaction pricing.
Overall, Subran’s remarks deliver three clear messages: U.S. inflation may still peak above 3.7%, leaving the door open for a September Fed hike; the ECB is unlikely to move again after last month’s increase; and war-related economic effects are still being absorbed, although the backdrop has improved relative to several weeks ago. Source: ChainCatcher, citing Jin10.