Central Banks Shift Hawkish as 12 Out of 14 Major Banks Change Policy Outlook

Central banks around the world have shifted their policy sentiment in a more hawkish direction over the past year, according to data from Permutable. The Major Central Bank Sentiment Index shows that out of the 14 major central banks monitored, 12 have moved towards a more hawkish outlook.

The largest shift was seen at the Reserve Bank of New Zealand, which recorded a 139.9 point increase in its sentiment index over the past year, taking its current reading to +87.1. The Bank of England and Federal Reserve also saw significant shifts, with their sentiment indices increasing by 36.0 and 81.2 points respectively.

Despite these changes in policy sentiment, not all central banks have raised interest rates. In fact, the Fed and Bank of England have both been on hold since December, but still saw a shift towards more hawkish sentiment.

The data from Permutable suggests that energy prices, currencies, labour markets, and domestic demand are likely to shape the next phase of policy decisions for central banks. The analysis highlights that the policy debate has changed more than the headline rate in several economies.