Global Central Banks Adjust Rates as Inflation and Uncertainty Persist
By Sophie Kiderlin and Stefano Rebaudo
Central Bank Rate Decisions and Economic Outlook
LONDON/MILAN, Nov 5 (Reuters) - Several major central banks have raised interest rates this week, though they appear at very different stages of the tightening cycle, with some just getting started and others potentially nearing the end.
Policymakers remain wary of inflation, and the outlook for interest rates will depend in part on developments in the Middle East conflict and their impact on energy prices, which have fallen since Democrats swept the US midterm elections.
The Bank of England raised rates for the first time in more than three years on Thursday, while the Reserve Bank of Australia delivered its fifth increase of 2026 this week, and could now be done.
The Federal Reserve, European Central Bank and Bank of Japan all left rates unchanged last week but kept the door open to further increases.
Here's where central banks in the Group of 10 developed economies stand, ranked from highest to lowest policy rate:
Australia
Reserve Bank of Australia Policy Update
1/ AUSTRALIA
The Reserve Bank of Australia raised its cash rate to 4.85% this week, the highest level in 18 years.
However, the vote was unexpectedly close and the bank struck a less hawkish tone, suggesting policymakers may be nearing the end of their tightening campaign.
Markets are not pricing in further increases.
Norway
Norges Bank Holds Rates Steady
2/ NORWAY
Norges Bank left rates unchanged on Thursday, as expected, after raising them twice this year.
The central bank reiterated that further tightening remains possible to contain inflation, noting that conflict in the Middle East continues to create uncertainty over the outlook for prices.
United States
Federal Reserve Maintains Cautious Stance
3/ UNITED STATES
The Federal Reserve left rates unchanged last week, awaiting further evidence on inflation, which it said remained elevated.
Political Pressures and Market Expectations
President Donald Trump has repeatedly called for lower rates and accused policymakers of being "hostile" and "partisan" after September's rate increase. Fed Chair Kevin Warsh rejected those accusations, stressing the central bank's independence.
Markets are pricing an 80% chance of a rate increase in December and expect further tightening in 2027.
Britain
Bank of England Raises Rates
4/ BRITAIN
The Bank of England raised rates for the first time in more than three years on Thursday, taking its policy rate to 4%.
The BoE 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.
All members of the Monetary Policy Committee voted to raise rates, with one backing a larger increase.
New Zealand
Reserve Bank of New Zealand Surprises Markets
5/ NEW ZEALAND
The Reserve Bank of New Zealand surprised markets last week by keeping its official cash rate at 2.75% in a narrow vote rather than delivering a third consecutive increase.
Governor Anna Breman said the chances of a rate rise in December were "high".
Euro Zone
European Central Bank Monitors Inflation Risks
6/ EURO ZONE
The European Central Bank left rates unchanged last week but warned inflation risks were rising.
Data on Wednesday showed inflation accelerated to a three-year high in October.
Fiscal Concerns and Leadership Changes
Policymakers are also monitoring a sharp rise in France's debt risk premium, driven by investor concerns about the country's debt burden and uncertain fiscal outlook.
ECB President Christine Lagarde also announced her early resignation.
Canada
Bank of Canada Raises Key Rate
7/ CANADA
The Bank of Canada raised its key rate for the first time in more than three years last week, as expected, but Governor Tiff Macklem said policy remained slightly accommodative.
The bank raised rates by 25 basis points to 2.5%, still below the 2.75% level it estimates is neither restrictive nor expansionary for the economy.
Sweden
Riksbank Responds to Inflation Concerns
8/ SWEDEN
Sweden's Riksbank, long among the more dovish major central banks, raised rates for the first time since 2023 on Wednesday, taking its policy rate to 2%.
The move was widely expected after inflation concerns intensified and growth fears eased.
Policymakers signalled further increases, although money markets are not fully pricing another move until March 2027.
Japan
Bank of Japan Maintains Steady Policy
9/ JAPAN
The Bank of Japan also kept rates steady last week, as expected.
The bank declared victory in its nearly 14-year effort to achieve its inflation target and signalled vigilance over price pressures, suggesting another increase could come soon.
It also nudged up its inflation forecasts. Recent data has pointed to broadening price pressures.
Switzerland
Swiss National Bank Holds Policy Rate
10/ SWITZERLAND
The Swiss National Bank is expected to keep its policy rate at 0% in the coming months. Minutes from its September meeting showed policymakers believed monetary conditions were appropriate to keep inflation within target.
Inflation rose to its highest level in nearly three years in October, but, at 1.5%, remains well contained.
Low yields should help prevent excessive appreciation of the Swiss franc, although geopolitical tensions have increased demand for safe-haven assets this year.
(Reporting by Sophie Kiderlin in London and Stefano Rebaudo in Milan; Editing by Alun John and Mark Potter)
