THINK Ahead: Roll up, roll up, play the data dependence game of doubt! in Stock News 30/03/2026 Markets expect three rate hikes from the ECB and Bank of England. ING expects none. Roll up! Come take your chance! If you’re going to be right, it won’t be decided by the data, argues James Smith, but by energy prices. And that’s where investors may be getting central banks wrong. Doubting data dependence Can anything stop the central banks from hiking rates in April? Financial markets increasingly say “no”. Investors are pricing a 60-70% probability of ECB/Bank of England hikes next month. We’re way less convinced, but that’s not the point. The question here is what will sway central banks one way or the other. They would tell you it is the data. ECB President Lagarde said so in her speech this week. Officials want to keep an open mind and let the numbers do the talking. Except that isn’t going to happen. Quite the opposite. I’m here to tell you that none of the economic data released over the next month will have much – if any – bearing on whether the central banks hike rates in April. Remember, the fundamental unknown is not whether inflation will rise in the aftermath of the Middle East crisis, but whether we will see the so-called “second round effects”. Will we see businesses across the economy, including in the service sector, raising prices in response to higher energy costs? And will workers demand higher pay as their bills rise? Clearly, the higher energy prices rise – and the longer they stay high – the greater the risk of that happening. And as I wrote last week, the relationship is not necessarily linear. But it also requires central bankers to take a view on the underlying power of businesses and workers to protect their bottom lines. Some will argue rates should rise because that’s what you do in energy price shocks. I’m thinking particularly of those acolytes of the 1970’s Bundesbank (where aggressive rate hikes famously helped Germany avoid the worst of the inflation wave). Bank of England Chief Economist Huw Pill, who openly counts himself as an admirer, argued this week that uncertainty is no excuse for a delay on rate hikes. Others – like us – will argue that the economy looks wildly different to how it did in 2022, when the last energy shock hit. The jobs market is much, much cooler. Fiscal policy is no longer a tailwind (notwithstanding Germany), and in many cases it’s a headwind (UK!). Central bank rates are at or above neutral, where they were still at zero back in early 2022. The economy’s ability to generate long-lasting inflation is greatly diminished. Still, whichever side of the fence you’re on, the data over the next few weeks isn’t going to change your mind. Take the jobs numbers, which we’ll get in the US next week. January was strong, February weak, the picture muddied by strikes and weather. March will give us a hint as to where the true story lies – James Knightley discusses it more below. But in short, the wider body of evidence suggests this is a low-hire, low-fire economy. Europe is in a similar predicament, and a period of heightened uncertainty won’t help. How about inflation? We’ll get the initial read on March in Europe next week. Rising petrol/diesel prices will push it up. But the impact on core inflation could take months to emerge. So that puts the focus squarely on the surveys, which fall into three categories. First, pricing. We had the purchasing managers’ indices this week. My main takeaway w