Global Central Banks Converge Towards Rate Cut Caution
JustinThe U.S. Federal Reserve has moved back into line with other major rate setters after it cut rates by a quarter point on Wednesday but pushed back against market bets that it would keep going as the Washington shutdown fogs up its forecasting lens.
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The U.S. Federal Reserve has moved back into line with other major rate setters after it cut rates by a quarter point on Wednesday but pushed back against market bets that it would keep going as the Washington shutdown fogs up its forecasting lens.
The Bank of Japan and European Central Bank left rates unchanged on Thursday.
Thomson ReutersHow interest rates have changed among G10 central banks
Here's where 10 major central banks stand after the latest round of meetings:
1/ SWITZERLAND
The Swiss National Bank cut its key rate to 0% in June and is widely expected to hold steady with markets pricing a long pause.
In its first set of minutes detailing its rate setting discussions, published last week, the SNB quashed market speculation that it would return to negative rates to stop the strong francpushing the sluggish economy into deflation.
Thomson ReutersSwitzerland's inflation and interest rates
2/ CANADA
The Bank of Canada, battling an economic slowdown exacerbated by U.S. tariffs and the inflationary impact of the trade war, cut rates to a more than three-year low of 2.25% on Wednesday.
It also sent strong signals that easing ends here and traders see more than 60% odds on the BoC standing pat until December 2026.
Thomson ReutersCanada's inflation and interest rates
3/ SWEDEN
Money markets price in less than a one in five chance of further easing before 2026 as domestic inflation stays sticky, which has sent traders piling in to Sweden's crown. The currency has risen 15% against the dollar year-to-date. (0#SEKIRPR)
Thomson ReutersSweden's inflation and interest rates
4/ NEW ZEALAND
The Reserve Bank of New Zealand cut rates by a punchy 50 basis points (bps) to 2.5% this month in an attempt to prop up a frail economy.
Markets see a good chance of a further cut in late November, though inflation sitting at the top of the RBNZ's 1-3% target band could be a complication.
Thomson ReutersNew Zealand's inflation and interest rates
5/ EURO ZONE
The ECB on Thursday matched traders' expectations and held the bloc's main deposit rate at 2% for a third straight meeting.
Traders viewed this ECB easing cycle as almost over, pricing in less than a 50% chance of further easing by July 2026.
Thomson ReutersEuro zone inflation and ECB interest rates
6/ UNITED STATES
The Fed on Wednesday executed a widely flagged 25 bps cut but pushed back against market bets for more by warning that data gaps caused by the U.S. government shutdown were clouding its forecasting lens.
"If you're driving in the fog you slow down," Chair Jerome Powell said in his post-announcement press conference.
The rate cut drew dissent from two policymakers, with Stephen Miran again calling for a deeper reduction and Kansas City Fed President Jeffrey Schmid favoring no cut given above-target inflation.
Traders price a 70% probability of a 25 bps December cut, down from 84% ahead of Wednesday's decision.
Thomson ReutersUS inflation and interest rates
7/ BRITAIN
The Bank of England is another major rate setter that is signalling cautious moves from here as it kept rates unchanged at its last meeting and said inflation risks remained high.
Traders expect another hold on November 6 but markets price a 60% chance of a December cut after above-target UK inflation at least held steady in September.
Thomson ReutersBritain's inflation and interest rates
8/ AUSTRALIA
The Reserve Bank of Australia has cut rates by 75 bps since February but hotter-than-expected inflation encouraged it to hold rates steady and turn more hawkish in September.
That trend has continued, pushing expectations for the next cut forward to at least February 2026. (0#AUDIRPR).
Thomson ReutersAustralia's inflation and interest rates
9/ NORWAY
Norway's central bank eased borrowing costs by 25 bps to 4.0% in September but signalled further cuts were less likely because underlying inflation was rising. That has helped the crown keep powering higher against the dollar, with a 12% gain for the year so far (0#NOKIRPR).
Thomson ReutersNorway's inflation and interest rates
10/ JAPAN
The Bank of Japan, the sole central bank in hiking mode, kept rates steady on Thursday but repeated its pledge to keep increasing borrowing costs if the economy moves as it projects, shifting investor focus to December's meeting.
The yenweakened after the announcement.
U.S. Treasury Secretary Scott Bessent this week called for speedier BOJ rate hikes to avoid weakening the currency too much.
