From Barron's, June 15:
The Bank of England is on the brink of lowering interest rates. But one very entertaining factor could get in the way, strategists at TD Securities predicted this week: Taylor Swift.
An estimated 1.2 million Swift fans, or Swifties, from around the world are gathering in the United Kingdom this summer to watch the entertainer put on 15 of her Eras Tour shows. Swift’s shows have boosted economies around the world before. And they could boost inflation in the UK, too, as fans compete for hotel rooms in the cities where she’s playing.
Lucas Krishan and James Rossiter, both of whom are macro strategists at TD Securities, wrote on Friday that they’ve been tracking hotel rates in the cities where Swift plays concerts. They found that the rates show “unusual strength” around the shows.
The strategists looked at dates of upcoming performances and matched them against the dates on which British forecasters track inflation. In June, the inflation-tracking dates line up with one Swift show, but it’s in the smaller city of Cardiff, Wales, and the inflation impact should be “minimal,” the strategists wrote.
The data this summer should be mild enough to allow the Bank of England to cut its base interest rate from the current 5.25% in August, the strategists project. But Swift’s London tour dates in August could be a bigger issue for inflation—and potentially impact the bank’s rate-cutting decision for September.
The hotel price surge “could be material,” adding as much as 30 basis points to services inflation, the strategists wrote. A jump of that magnitude could prompt the Bank of England to reconsider another rate cut....
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