Central banks take a breather, though more hikes are to come
TLT•The Federal Reserve, European Central Bank and Bank of Japan held rates steady, while signaling inflation risks and the possibility of further increases. The Bank of Canada raised its key rate by 25 basis points to 2.5%, and markets expect rate hikes from several central banks next week.
1. Major banks hold rates
The Federal Reserve and European Central Bank kept rates unchanged, citing elevated inflation and rising inflation risks. The Bank of Japan also held rates steady, while signaling that another increase could come soon.
2. Hikes expected next week
Markets see a high chance of rate increases next week from the Reserve Bank of Australia, Norges Bank, the Bank of England and Sweden’s Riksbank. In New Zealand, Governor Anna Breman said the chances of a December hike were high; markets put the probability at roughly 80%.
3. Canada raises its rate
The Bank of Canada raised its key rate by 25 basis points to 2.5%, its first increase in more than three years, and lifted its 2027 inflation forecast to 3.1% from 2.0%. In the United States, traders priced an 80% chance of a December hike and at least one, likely two, further moves in 2027.
