Major Central Bank Policy Decisions
1. Federal Reserve: Maintained interest rates at 3.75%–4.00%.
The vote was 10-2, with Cook and Hamak supporting a 25 basis point rate hike. The Fed believes economic activity is strong, with consumption and capital investment showing resilience, but inflation remains high. The market continues to focus on whether there will be a rate hike in December.
2. European Central Bank: Maintained deposit rate at 2.50%.
The ECB believes rising energy prices increase upside risks to inflation, but tighter financing conditions could simultaneously suppress economic growth and inflation. The market remains divided on whether to raise rates in December. Furthermore, Lagarde announced she will step down early on February 7, 2027, bringing new uncertainty to the ECB's future leadership.
3. Bank of Japan: Maintained interest rate at 1.25%.
The vote was 8-1, with Takata advocating for a rate hike to 1.50%. The Bank of Japan raised its inflation forecast and clearly stated that underlying inflation has reached a level broadly consistent with its 2% target, and it remains prepared to continue raising rates. The December meeting is an important window for observation.
4. Bank of Canada: Raises interest rates by 25 basis points to 2.50%.
This is the first rate hike by the Bank of Canada in over three years. The central bank noted that persistently high oil prices have kept inflation around 3%, and it expects average inflation to reach 3% by 2027, one percentage point higher than previously forecast. The central bank stated that further rate hikes may be necessary in the future, but it will act cautiously.
5. Reserve Bank of New Zealand: Maintains interest rate at 2.75%.
The vote was 4-3, with three members supporting a 25 basis point rate hike to 3.00%. New Zealand's third-quarter inflation rate was 3.7%,
and the Reserve Bank of New Zealand expects it to rise to 4.4% in the fourth quarter. The committee as a whole believes that monetary policy may need to be tightened in the future.
Three key signals to watch:
1. Global interest rate expectations are shifting back towards tightening: Canada has actually raised rates, New Zealand has seen a clear hawkish divide, and two members of the Federal Reserve support a rate hike.
2. Energy prices are becoming a common variable: The US, Canada, New Zealand, Europe, and Japan are all affected to varying degrees by rising energy costs. 3. The Japanese yen and Japanese government bonds are worth close monitoring: The Bank of Japan has confirmed that underlying inflation has reached around 2%, and the market will continue to assess the possibility of a rate hike in December.
