Fed

As expected, the Fed left rates unchanged at the July meeting with Chair Warsh offering little in terms of forward guidance. We continue to expect the Fed to remain on hold this year. Inflation remains too high for the Fed’s comfort, so that for now the Fed is continuing to drive home the commitment that they will deliver price stability. We think there’s enough uncertainty around the outlook that Fed officials keep policy unchanged for the next several meetings. If we’re right, the Fed will eventually become more worried about jobs than inflation. We continue to think the next move will be downward, toward neutral, but not until the first half of 2027. ECB Another rate hike from the ECB in September is the path of least resistance but isn’t a done deal yet provided oil prices moderate further and US-Iran deal materialises by around mid-August. Oil prices are back close to 80$ and macro data have generally surprised on the dovish side. But a further improvement on the conflict front from the situation in early August is needed for the hike in September not to go ahead. The ECB, in any case, doesn’t look to be behind the curve or in particular hurry to tighten monetary policy.

BoE

Bank Rate was maintained at 3.75%, as was universally expected. An additional dissenting hawkish vote surfaced in July to 6-3 (Mann) but policy guidance was not altered in any material way. Our ‘modal’ forecast for Bank Rate is unaltered: 25bp rises in November 2026 and February 2027 – though a ‘mean’, or probability-weighted, forecast would show something closer to ~35bp of tightening over the next 9-12 months. Market pricing for September has been scaled back to ~7bp from ~13bp ahead of the announcement. November remains in play, in our view, but the risks are tilted towards a later move and less overall policy tightening than on our modal forecast. BoJ At the July meeting, BOJ Governor Ueda cited the Middle East, AI, and the yen as three upside risks to inflation, suggesting that each meeting will be “live” from this point forward. Our main scenario is still for an October hike, but a September move would come as no surprise depending on how those three risk factors play out.

SNB

Deflationary pressures persist in Switzerland and the economy continues to show signs of weakness. However, the currency has strengthened, but further monetary easing might not be very effective to limit CHF appreciation. We expect FX intervention to be SNB’s preferred tool to counter excessive appreciation. That said, a 25bp rate cut in ‘26 cannot be ruled out entirely. Norges Bank The Norges Bank left the policy rate unchanged at 4.25% at its August meeting, in line with both our expectations and market consensus. Policymakers acknowledged softer recent inflation but maintained that it is too early to conclude that the inflation outlook has changed materially, keeping the door open to further tightening. This remains broadly consistent with our view that the Bank will stay on hold in the near term before delivering one final 25bp hike in December 2026.

Riksbank

The Riksbank left the policy rate unchanged at 1.75% in August and maintained its cautious hawkish bias. Policymakers reiterated that a rate hike later this year remains possible, pointing to stronger than expected growth and inflation over the summer, while highlighting upside inflation risks linked to geopolitical developments. However, with no updated forecasts or rate path and the overall economic outlook judged to be largely unchanged, the message stopped short of signalling imminent action. We therefore continue to expect the Riksbank to remain on hold in the near term despite retaining a conditional tightening bias. BoC The BoC’s July meeting did not move the needle for markets – the BoC is comfortable with steady policy and is leaving the door open for both easing and tightening. Further growth risks from USMCA renegotiation and upside risks to inflation from higher energy prices leave the BoC constrained to adjust the policy rate. We see BoC on hold but think hike pricing in 2H 2026 is unlikely to materialize. RBA The RBA kept the policy rate on hold, as widely expected, though the policy statement carried a slightly hawkish tone. In our base case, we now see another 25bp hike in total in ’26. RBNZ The RBNZ meeting in July was hawkish and signalled for further hikes. The economy continues to operate at significant spare capacity, and the unemployment rate remains high. We expect another 25bp hike in policy rate for a terminal rate of 2.75%.