The Federal Reserve and European Central Bank held rates steady this week, while the Bank of Canada raised its key rate by 25 basis points to 2.5%. Markets expect further hikes from several central banks, including the Bank of England next week.
The Federal Reserve and European Central Bank kept rates unchanged this week but signaled inflation risks remain. The Fed said inflation remained elevated; the ECB warned that inflation risks were rising.
Markets are almost fully pricing a Bank of England hike next week, while traders see an 80% chance of a Federal Reserve hike in December and at least one further move in 2027. Markets also see roughly an 80% chance that New Zealand’s central bank will raise its 2.75% official cash rate in December.
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%. Australia, Norway and Sweden are also facing expectations of further tightening, while Japan and Switzerland are expected to hold rates steady.
