Central banks are leaning hawkish as a Middle East energy shock and sticky core inflation keep the tightening cycle alive. Published commentary this week suggests the Fed, Bank of England, Bank of Canada, Riksbank and ECB are all signaling more hikes are possible.
At the Fed, researchers highlight a clear split. Governor Waller is described as firmly hawkish, open to backing a 25bp hike in December and even 50bp if October core CPI prints near 0.3%, on credibility grounds. Governor Bowman is read as more balanced, wanting to see the effect of prior hikes and the hit to rate-sensitive sectors, and intending to look through temporary energy-driven inflation. The Dallas Fed President is characterized as the most hawkish voice, calling for at least two more 25bp moves.
Abroad, analysts note the BoE raised Bank Rate 25bp to 4% with Bailey flagging upside inflation risks, the BoC lifted to 2.5% with Macklem leaving the door open, the Riksbank went to 2%, and the ECB held at 4.5% but signaled the pause is not the end. Argentina is flagged as the main dovish outlier.
Key catalysts researchers are watching: US October CPI, PCE, payrolls, and the December FOMC.
By the numbers:
• Policy rates: Fed 3.75–4.00%, ECB 2.50%, BoE 3.75%, BoJ 1.25%.
Charts: finchiefs.com/data/policy-rates