I. The "Super Central Bank Week" Concludes:
1. The Federal Reserve Resumes Rate Hikes: The Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00%, its first rate hike in three years. The hike was unanimously approved, with 16 of the 18 officials expecting at least one more rate hike in 2026.
2. The Bank of Japan Continues Tightening: The Bank of Japan raised interest rates by 25 basis points to 1.25%, the highest level since 1995, just three months after its last rate hike, the shortest interval since 1990. The vote was 7 to 2, with two members believing that further tightening might be premature.
3. The Bank of England Holds Off: The Bank of England kept its interest rate unchanged at 3.75%, holding it steady for the sixth consecutive time. The vote was 6 to 3, with three members advocating for a 25 basis point hike to 4%.
II. Why the Diverging Policy Pace of the Three Major Central Banks? 1. Federal Reserve: Inflation Shifts from "External Shock" to "Internal Problem"
Core Logic: The US economy can still withstand higher interest rates, while the driver of inflation has shifted from "external shock" to "internal demand." Supply shocks may subside naturally as the situation eases, but inflation driven by internal demand can only be suppressed by tightening monetary policy.
2. Bank of Japan: Caught Between Inflation and Exchange Rate Challenges
Core Logic: Imported inflation caused by the depreciation of the Japanese yen and the impact of oil price shocks has reached a point where it cannot be ignored. Japan has shifted its focus from "how to create inflation" to "how to prevent excessive inflation." The direction of ending ultra-loose policies remains unchanged, but internal disagreements persist regarding the pace of interest rate hikes.
3. Bank of England: Second-Round Inflation Effect Not Yet Fully Developed
Core Logic: UK inflation faces upside risks, but the "second-round" effect is not yet apparent; a weak labor market and slowing wage growth limit the transmission of energy prices to the "wage-price spiral," becoming an important basis for the Bank of England's decision to postpone interest rate hikes.
III. Market Outlook
1. Federal Reserve: Clear Direction but Uncertain Pace
① The market is not currently trading on the "end of the rate hike cycle," but rather on the timing of the next rate hike and the extent to which the Fed will ultimately raise rates.
② Most Fed members expect at least one more rate hike this year. Swap data suggests the next hike could occur as early as next month, while most major banks predict the next action will not come until December.
2. Bank of Japan: Room for Normalization
① Normalization remains the main theme, but the market still has doubts about the pace of subsequent rate hikes and is currently more focused on when the next rate hike will occur.
② The market consensus is that there will be at least two more rate hikes, with 1.75% as the baseline expectation. However, oil prices and the yen's performance could push it above 2.0%.
3. Bank of England: Has a Second Round of Inflation Arrived?
① Market predictions are highly divergent, ranging from "no more rate hikes" to "four hikes." Many institutions are betting on a rate hike starting in November.
② The fundamental disagreement lies in the assessment of the second round of inflationary effects. Aggressive pricing reflects concerns about a wage-price spiral triggered by energy shocks, while institutions pessimistic about interest rate hikes believe that a cooling labor market, slower wage growth, and limited transmission of energy costs to domestic prices are contributing factors.
4. Energy Prices: The Biggest Variable for All Three Central Banks
① If oil prices remain high, global inflationary pressures may persist longer, forcing central banks to tighten further. A decline in oil prices could alleviate pressure on central banks to further tighten policies and even alter the interest rate hike path for some central banks.
② The duration of the Middle East situation and the trend of oil prices may directly determine the pace and endpoint of subsequent policies by the three major central banks. If the three central banks continue to signal tightening, the market may repric the global interest rate path.
