July 24, 2024

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“Swiftflation” could determine the direction of UK monetary policy

“Swiftflation” could determine the direction of UK monetary policy

The Eras Tour, the world tour of American singer Taylor Swift, has proven to be an event by drawing crowds and raking in over US$1 billion at the box office to date. It is an economic phenomenon that is capable of influencing even the monetary policy of countries.

The same could happen in the United Kingdom, where the singer is scheduled to perform until Sunday, June 23, in addition to other shows in London in August.

According to an analysis by investment bank TD Securities, with hundreds of thousands of predictions Swifties, The singer’s fans are expected to travel to the capital to witness the last leg of the British tour, resulting in a sharp increase in consumption in the city, which may require the Bank of England (BoE) to postpone an interest rate cut.

“We still expect the BoE to cut interest rates in August, but inflation data for the month [de agosto] MPC (Monetary Policy Committee) may wait until September,” reads an excerpt from the bank’s analysis, on the website. CNBC.

The market expects the BoE to start cutting the key interest rate soon, to 5.25%, the highest level in nearly 16 years. According to a study conducted by Reuters63 out of 65 economists polled expect interest rate cuts to begin in August.

The final leg of Taylor Swift’s tour, which weighs on London, is unlikely to make a cut in the September meeting, according to a TD Securities analysis, given the impact it could have on August inflation data.

“The increase in hotel prices may temporarily add up to 30 basis points to services inflation,” reads an excerpt from the analysis.

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The economic impact of the Eras tour is not limited to the UK. It has become a phenomenon in many of the countries it has visited, to the point where it has earned nicknames such as “Swiftflation” and “Swiftonomics”, referring to the increased demand for hotels, flights and food in the cities of the presentations.

The UK tour kicked off in Edinburgh, Scotland, and according to the city’s government, the shows and related expenses added about 77 million pounds ($98 million) to the local economy.

According to TD Securities, the data indicated a “larger than normal” increase in hotel prices in the Scottish capital during Swift’s visit.

However, the “Swiftflation” phenomenon is coming to an end. During a concert in Liverpool on Thursday, June 13, Swift told the audience that the tour should end in December.