Market Pricing Shifts: ECB Hikes, Fed in Limbo
The latest market pricing for interest rate hikes has undergone significant changes following recent events. The European Central Bank (ECB) now expects a 46 bps hike by year-end, with a 99% probability of a rate hike at its next meeting.
In contrast, the Bank of Japan (BoJ) is less likely to raise interest rates, with only a 75% probability of a hike in its next meeting, despite an expected 42 bps increase this year. The Federal Reserve's (Fed) September rate decision now has a 50% chance of a 33 bps hike.
Meanwhile, the Bank of Canada (BoC) and the Reserve Bank of New Zealand (RBNZ) have seen significant shifts in market expectations. The BoC's statement was more hawkish than expected, with Governor Macklem downplaying recent US tariffs. In contrast, the RBNZ's decision to raise interest rates by 25 bps was seen as dovish, with less appetite for tightening.
On the other hand, the Bank of England (BoE) and the Swiss National Bank (SNB) remain cautious, with only a 91% probability of no change at their next meetings.