Central banks are tilting hawkish as Middle East energy costs keep inflation sticky above target, according to research published this week.
The most hawkish signal came from Japan, where the central bank held the call rate near 1.25% on an 8-1 vote. The dissenter pushed for 1.5%, arguing underlying inflation has reached target. The BOJ sees CPI clearly above 2% through fiscal 2027 and plans to accelerate ETF sales from early 2027.
In the US, one FOMC voter argued policy is at least 50bp short of even modestly restrictive and that two more 25bp hikes are warranted before pausing, citing core PCE at 3.1%. The committee itself held at 3.75-4% by a 10-2 vote.
Analysts also note the ECB held rates but debated a hike, with President Lagarde signaling the direction of travel is clear. Forecasters surveyed by the ECB now see 2026 inflation at 3.0%.
Elsewhere, Norway hiked 25bp to 2.5%, India signaled cuts are off the table, and the RBA warned inflation will stay elevated.
Key catalysts ahead: the December Fed and ECB meetings.
By the numbers:
• Policy rates: Fed 3.75–4.00%, ECB 2.50%, BoE 3.75%, BoJ 1.25%.
• Next decisions: BoE 5 Nov 2026 (22 of 25 research houses expect a hike).
Charts: finchiefs.com/data/policy-rates