Taylor Swift’s London Eras Tour could delay Bank of England rate cut, analysts say
LONDON — Taylor Swift’s record-shattering Eras Tour is continuing to supercharge consumer spending.
As it enters its U.K. leg, it suggests that the Bank of England may not be out of the woods yet in its fight against inflation.
Hundreds of thousands of dedicated Swifties are expected to flock to London in August for Taylor Swift’s final U.K. dates. This could provide an economic boost that might defer a possible September interest rate cut, according to investment bank TD Securities.
“We still anticipate a BoE cut in August.
However, the inflation data for that month might keep the MPC (Monetary Policy Committee) on hold in September. The bank’s macro strategist, Lucas Krishnan, and its head of global macro strategy, James Rossiter, wrote this in a note Friday.
The Bank of England is expected to soon begin lowering its bank rate from a 16-year high of 5.25%. All but two of the 65 economists polled by Reuters anticipate a cut in August. Financial markets, however, are pricing in September.
However, there is a possibility of a clash between one of Swift’s August tour dates and a key inflation index day. This could potentially skew the data. The analysts mentioned this concern.
“A surge in hotel prices could be significant,” wrote Krishnan and Rossiter. They suggested it could temporarily add 30 basis points to services inflation. Additionally, it could contribute an extra 15 basis points to the headline inflation rate.
The BOE did not respond specifically to the comments when contacted by CNBC.
However, they stated, “the MPC looks at a wide range of economic indicators when they make their decisions on interest rates.”
The economic impact of Swift’s sell-out tour has been well-documented. Terms such as “Swiftflation” and “Swiftonomics” have emerged to refer to the spike in spending on services. This includes hotels, flights, and restaurants around her performances.
Edinburgh, Scotland, hosted the start of Taylor Swift’s U.K. tour earlier this month. The city reported that the concerts and associated spending contributed an estimated £77 million ($98 million) to the local economy.
In a separate note, Barclays bank said the full U.K. tour could add an estimated £1 billion to the British economy.
TD Securities reported that the latest data pointed to a “larger than usual” uptick in hotel prices. This occurred in the Scottish capital during Swift’s visit last weekend. The upside pressure was less pronounced in Liverpool, where she culminated her northwest England leg on Thursday.
Swift is also due to perform in Cardiff, Wales, and London later this month.
While Swift’s Cardiff date may coincide with a June inflation index day, analysts said the impact was likely to be minimal. They noted this was due to the relatively small size of the city.
The Bank of England will meet next Thursday. They will give their latest interest rate decision and provide their outlook on the future course for inflation.
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