Central Banks Pause Rate Hikes, Yet Further Tightening Expected Globally
By Sophie Kiderlin and Stefano Rebaudo
Global Central Bank Policy Updates and Outlook
LONDON, Oct 29 (Reuters) - Major central banks took a break from interest rates rises this week, but they are by no means done, with energy prices near multi-month highs and no resolution to the conflict in the Middle East in sight.
The Federal Reserve and European Central Bank both kept rates steady this week, but signaled with inflation above target they still have work to do. The ECB is also in focus as President Christine Lagarde announced she would step down early.
The Bank of Japan is likely to stay on hold later this week, but next week's central bank meetings should see hikes, including from the Bank of England, its first of 2026.
Here's where central banks in the Group of 10 developed economies stand, ranked from highest to lowest policy rate.
Central Bank Policy Rate Overview
1/ Australia
Reserve Bank of Australia: Upcoming Decision
The Reserve Bank of Australia has hiked interest rates four times this year.
Their next policy decision is on November 3, and markets see a high chance of another hike, boosted by a hot inflation print and hawkish comments from governor Michele Bullock.
2/ Norway
Norges Bank: Inflation and Rate Path
Norges Bank also meets next week after catching markets off guard with a hike in May and repeating the move in September, when it left the door open for additional tightening.
Its annual core inflation held at 3.0% in September, slightly above the central bank's 2.9% forecast.
3/ United States
Federal Reserve: Steady for Now, Eyes on Inflation
The Federal Reserve left rates unchanged on Wednesday ahead of next week's U.S. midterm elections while awaiting further evidence on inflation, which “remained elevated.”
President Donald Trump has repeatedly called for rate cuts and recently 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.
Traders price 80% chance of a hike in December and see at least one, likely two, further moves in 2027.
4/ Britain
Bank of England: Anticipated Hike
The Bank of England has not raised rates this year so far, but that will likely change next week.
Markets are almost fully pricing a hike, backed by recent data including hotter-than-expected September inflation and a pickup in wage growth.
Governor Andrew Bailey has long warned the likelihood of a hike grows the longer energy prices stay high.
5/ New Zealand
Reserve Bank of New Zealand: Surprise Hold
The Reserve Bank of New Zealand surprised on Wednesday by keeping its benchmark official cash rate at 2.75% in a narrow vote rather than hiking for the third time in a row.
Governor Anna Breman said on Thursday chances the bank will hike the official cash rate in December are "high"
Markets see roughly an 80% probability of that.
6/ Euro Area
European Central Bank: Hawkish Hold Amid Risks
The European Central Bank delivered what market participants deem a hawkish hold, leaving rates unchanged but warning that inflation risks were rising.
The central bank's most immediate challenge is the sharp rise in France's debt risk premium, driven by growing investor concerns over the country's debt burden and uncertain fiscal trajectory
President Christine Lagarde resigned on Thursday so she could weigh in on political matters in France and globally.
7/ Canada
Bank of Canada: First Hike in Years
The Bank of Canada raised its key rate for the first time in more than three years on Wednesday, as widely expected, but Governor Tiff Macklem said policy remained slightly accommodative.
The central bank hiked by 25 basis points to 2.5%, still below the 2.75% the BoC estimates is neither restrictive nor expansionary for the economy.
The BoC also raised its inflation forecast for 2027 to 3.1% from the 2.0% predicted in July.
8/ Sweden
Riksbank: Dovish to Hawkish Shift
Sweden's Riksbank, long in the dovish camp, now looks set for a rate hike, with markets pricing around an 80% chance of one next week.
Sweden's central bank chief earlier this month said that there was a strong case for a hike as the economy has been performing better than expected, and the risk of inflation overshooting its target has grown.
9/ Japan
Bank of Japan: On Hold, But Outlook Shifts
The Bank of Japan is set to keep rates steady this week.
But, the central bank is expected to signal its readiness to keep raising borrowing costs, and sources told Reuters that it may also raise its inflation forecast. Recent data has pointed to broadening price pressures.
Markets however aren't fully pricing in another hike from the BOJ until January 2027.
10/ Switzerland
Swiss National Bank: Stable Policy
The Swiss National Bank (SNB) is set to keep its policy rate at 0% for the coming months. Minutes of its September meeting showed policymakers thought monetary conditions are "appropriate" to keep inflation within its target range over the medium term.
Low yields should prevent the franc currency from appreciating too sharply, even though geopolitical tensions have often driven investors towards safe-haven assets in 2026.
(Reporting by Sophie Kiderlin in London and Stefano Rebaudo in Milan, editing by Alun John and Nick Zieminski)