Global Central Banks Diverge on Interest Rates Ahead of Key Decisions
The direction of global interest rates is diverging ahead of September's central bank decisions. The US Federal Reserve is expected to maintain its current interest rate, while the European Central Bank (ECB) and Bank of Japan (BoJ) may raise theirs amid energy price pressures and geopolitical risks in the Middle East.
The market is pricing a 63% chance that the Fed will keep its benchmark rate on hold in September. However, expectations for a hike by year-end are still strong. In contrast, the ECB is widely expected to raise interest rates by 25 basis points or 0.25 percentage points on September 10.
The Bank of Canada and Reserve Bank of Australia are also predicted to keep their rates steady in September. Meanwhile, the Bank of England and Swiss National Bank will announce their monetary policy decisions soon, with markets expecting them to hold rates on hold.