BoE joins the rate hike club, Australia may be done already
SPY•The Bank of England raised its policy rate to 4%, while Australia's central bank lifted its cash rate to 4.85% and signalled it may be near the end of its tightening cycle. Several other major central banks held rates steady or raised them.
1. Rate paths diverge
The Bank of England raised rates for the first time in more than three years, taking its policy rate to 4%. It said at least one further increase was likely if the Middle East conflict continues and projected British inflation would rise to around 5% in mid-2027.
2. Australia nears a pause
The Reserve Bank of Australia raised its cash rate to 4.85%, its highest level in 18 years, in its fifth increase of 2026. The vote was unexpectedly close and the bank struck a less hawkish tone; markets are not pricing further increases.
3. Other central banks
Sweden's Riksbank raised rates to 2%, its first increase since 2023, and signalled further increases. The Federal Reserve, European Central Bank and Bank of Japan held rates steady last week, while markets priced an 80% chance of a U.S. rate increase in December.
