Bank of England Governor Bailey said the fall in oil prices is "encouraging", but some inflationary pressures are already brewing.

Major institutions broadly expect the Fed to hold at the upcoming FOMC, but forecasts diverge sharply on subsequent direction and timing. No-cut/steady camp: Moody’s, Nomura, JP Morgan, Wells Fargo and BNY Mellon see a hold as baseline and deem near-term cuts unlikely; JP Morgan and others expect policy language to shift from easing-leaning toward neutral. Moody’s warns re-accelerating inflation expectations could prompt hikes. BNY Mellon expects the statement to signal two-way rate risks and to remove prior 2026 cut expectations; it does not expect any moves this year. Cut camp: Goldman expects a hold but will remove easing-leaning forward guidance and projects two 25bp cuts in June and December 2027. UBS expects the Fed to drop a dovish tilt yet still forecasts 25bp cuts in March and June 2027. Citi projects three 25bp cuts in September, October and December. Deutsche Bank expects the Fed to abandon easing language and begin cuts from mid‑next year, totalling 75bps by end‑2027. Hike/insurance-hike camp: Capital Economics and BNP Paribas see a real risk of precautionary hikes (Capital Economics flags two potential “insurance” hikes around December/early next year; BNP Paribas sees the earliest hike in December). Deutsche Bank flags rising upside risk to rates. PGIM expects the Fed to hold now but projects three hikes this year, three cuts in 2027 and one cut in 2028, with a terminal rate around 3.375%. Other notes: Barclays, BofA and ANZ also expect a hold and say the Fed will likely delete easing-leaning language in the statement; BofA expects potential tweaks to employment wording, ANZ expects a renewed 2% inflation commitment. Mitsubishi UFJ says the meeting’s market importance is driven mainly by forward guidance. Asset manager MFS expects a hold with signals of a neutral stance and possible changes to communication tools (less use of the dot plot, fewer/shorter press interactions).

The Hong Kong Monetary Authority said the Fed’s decision to hold rates met market expectations and that inflation remains elevated, reflecting policymakers’ concerns. Hong Kong money and financial markets remain orderly. Under the Linked Exchange Rate System HKD interbank rates broadly track USD rates, but short-term Hibor can diverge due to local HKD liquidity conditions such as seasonality and capital-market activity. US policy moves will depend on inf, employment and other data and will affect Hong Kong’s rate environment; market participants should factor rate risk into property, investment and borrowing decisions. HKMA will continue to monitor markets closely to maintain monetary and financial stability.