Policy makers tilted hawkish across the board this week as an energy shock met sticky core inflation.
Research covering the ECB flagged that the Governing Council held rates at 2.50% but debated a hike, with Lagarde warning high-debt euro members to budget for higher yields for longer. Headline euro area inflation jumped to 3.8%, and forecasters surveyed by the central bank now see 2026 HICP at 3.0%, with the modal deposit rate path revised up toward 2.75%. Analysts also highlighted AI capex as a meaningful growth and credit tailwind — accounting for roughly a quarter of recent euro area credit growth.
Commentary on the Fed noted Powell's committee holding at 3.75–4%, but one line of research argued policy is still 50bp below restrictive, with core PCE at 3.1% and two more hikes needed.
On the BOJ, researchers flagged an 8-1 hold at 1.25%, a CPI path "clearly above 2%," and a sharp step-up in ETF sales from January 2027. The RBA, RBI and Bank of Canada were all described as leaning tighter as Middle East oil pass-through lifts inflation projections.