SGH Macro Advisors produces concise, forward-looking proprietary reports on the major central banks and on key economic and policy developments that drive global bond, equity, and currency markets.
Founded in 2012, SGH has over the years built a reputation as a thought leader and source of well-informed, cutting-edge information, analysis, and insight on policy and financial markets. Its briefings and reports are highly valued by many of the world’s most well-known and influential hedge funds, money managers, and policymakers.
Highlights
UK Chancellor John Healey’s first Budget on Wednesday delivered the calm the bond market wanted, and a sharply higher inflation forecast that sets the Bank of England (BOE) to begin hiking again next month, though in our view it will still deliver far less tightening than markets expect.
We continue to see the Bank hiking to 4% on November 5 and to 4.25% on February 4 (see SGH 10/14/26, “BOE: Pill Validates A Limited Cycle”).
Whether inflation warrants a third dose of tightening at its April 29 forecast round will turn on spring pay settlements and the January jump in the energy price cap.
Wall Street Journal 11/5/2026
The U.K.’s central bank raised its key interest rate to 4% from 3.75%, where it had been since December.
With inflation set to push sharply higher, BOE officials saw an increased risk of second-round effects, and in particular a jump in wage demands early in 2027 in response to surging home heating bills.
However, officials signaled that they don’t anticipate that borrowing costs will go as high as investors expect, with one more increase to 4.25% likely. Ahead of the meeting, the BOE estimated that investors were anticipating an increase in the key rate to 5% by the end of next year.
“Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes,” said Gov. Andrew Bailey. “But, unless the Middle East conflict is resolved, neither does it seem likely to be the last increase.”
The Bank of England (BOE) will likely break its holding pattern on rates and hike in November, with four of the six committee members who voted to stand pat at 3.75% this week already telegraphing their readiness to move to 4%, and the Bank’s minutes arguing against waiting.
We also expect a second quarter-point move in Bank Rate to 4.25% at the February 4 meeting, once the Committee has had two full forecast rounds and fresh Monetary Policy Reports to confirm the inflation path it is already flagging.
New York Times 11/5/2026
The central bank said that inflation would climb to about 5 percent next year, far above its target, because of higher energy prices driven by the war in Iran.
The Bank of England raised interest rates on Thursday, for the first time in more than three years, as policymakers said they needed to take action against inflation caused by the war in the Middle East.
We are sticking with our expectation that the Reserve Bank of Australia (RBA) will lift the cash rate to 4.85% at its November 2-3 meeting.
We view the Bank’s reup on its inflation fight is worth a total of 50 basis points, and flagged November as a live meeting in our last report. We think the Bank will skip a move at its December 8 policy meeting and reassess in time for the February 9 meeting.
Bloomberg 11/3/2026
Australia’s central bank Governor Michele Bullock signaled a wait-and-see approach to further tightening after policymakers lifted the benchmark rate to an 18-year high, in a split vote that sent the currency lower.
At a press conference Tuesday in Sydney, the Reserve Bank chief highlighted that the tightening to date this year has yet to feed through to the economy, while reiterating the ongoing inflation challenge. Her comments came after the nine-member policy board raised the cash rate by a quarter-percentage point to 4.85%, extending the most aggressive tightening among developed economies.
Senior Reserve Bank of Australia (RBA) officials are likely to back Governor Michele Bullock’s strident stance against inflation during a run of scheduled public appearances this month, giving the Bank the chance to restore hike risk ahead of the November 2-3 meeting.
We continue to expect the Bank to deliver a fifth rate hike next month, taking the cash rate to 4.85%, even though markets slashed the odds after the Bank lifted the rate to 4.60% on September 29.
Bloomberg 11/3/2026
Australia’s central bank raised its key
interest rate to an 18-year high on Tuesday, extending the
developed world’s most aggressive tightening cycle as
policymakers struggle to bring inflation back to target.
The Reserve Bank’s board increased the cash rate by a
quarter-percentage point to 4.85%, the fifth hike this year.
We now think the October 28 meeting is live for a 25 basis point hike to 2.50%, a significant shift from August, when we believed the Bank would hold at 2.25% through year-end.
If the Bank hikes in October, we think it would likely skip December 9, which carries no new forecast, and space two increases in this mini cycle that we expect to total 50 basis points.
Bloomberg 10/28/26
The Bank of Canada hiked interest rates to ward off upside inflation risks posed by higher energy prices, and said it may need to raise borrowing costs further.
Policymakers led by Governor Tiff Macklem raised the benchmark overnight rate to 2.5% on Wednesday, the first increase in more than three years. The hike was expected by markets and was the consensus of Bay Street economists in a Bloomberg survey.
“Governing Council decided to increase the policy rate to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services,” the bank said in its statement.
“There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully.”
The Board typically waits for quarterly inflation data before acting, and this would be only the second time it has moved without the quarterly print already in hand since 2003.
Acting now, shows how far the Bank’s reaction function has shifted, from a Board willing to wait and assess the impact of its three earlier hikes this year to one no longer prepared to let that assessment delay a fourth.
We continue to expect another 50 basis points in total on the cash rate; a hike to 4.60% on September 29 and a further move to 4.85% on November 2-3, and no further moves this year. The Bank’s last meeting this year is December 7-8 before it breaks until February 8-9.
Sydney Morning Herald 9/29/26
Australian borrowers could face a run of rate hikes after RBA governor Michele Bullock warned an economic downturn may be needed if politicians and businesses failed to shake the nation’s productivity malaise.
The bank lifted rates to a 15-year high of 4.6 per cent on Tuesday and its monetary policy board struck a hawkish tone flagging more increases could be on the way if inflation figures to be released on Wednesday remained “unacceptably high”. While split on previous decisions, the board was unanimous in backing a fourth rate rise this year.
The Reserve Bank of Australia (RBA) is now more likely than not to raise the cash rate to 4.60% at its September 28-29 meeting on inflation data that has run hotter than the Bank’s own forecast on every measure since it last met.
We also now see real risk of a second hike in November, a shift from our prior call that a fourth hike, if it came at all, was more likely in November than September.
Bloomberg 9/29/26
Australia’s central bank resumed raising
interest rates on Tuesday, judging it couldn’t wait any longer
to respond to rising energy costs and resilient domestic demand
that threaten to intensify inflationary pressures.
The Reserve Bank’s board lifted the cash rate to 4.6% from
4.35%, taking rates to the highest level in
about 15 years. The nine-member policy committee voted
unanimously to deliver its fourth hike this year, saying firms
are experiencing cost pressures and either increasing prices or
looking to do so.
The Swiss National Bank (SNB) will likely hold its policy rate at 0% through 2027 rather than use the current favorable backdrop to rebuild policy space with a premature hike.
SNB officials could choose to rephrase the sentence the policy statement traditionally uses to describe the franc as overvalued, and convey the central bank is ready to intervene to weaken it to secure price stability.
A step to de-emphasize its readiness to intervene in the FX market would signal the Governing Board deems the widening policy differential with the ECB is becoming a policy-relevant factor for the SNB, which would pave the way for a hike during the projection horizon.
Bloomberg 9/24/26
The Swiss franc dipped to the lows of the
day versus the euro after the SNB kept its policy rate at 0% as
expected and changed its wording on FX intervention:
*SNB: WILLINGNESS TO INTERVENE IN FX MARKETS IF NEEDED
*SNB DROPS ‘INCREASED WILLINGNESS’ WORDING FROM FX
STATEMENT
We also need more evidence to be convinced of a 2026 hike, though that evidence gap is narrowing, and the run of testimony, yield moves, and ECB action this week makes the case for patience harder to sustain than it was even a month ago.
Those committee members who have been agitating for an immediate rate hike will dissent from the majority vote again, setting up a real battle – if there is still one to be had – for the November 5 forecast round meeting, but more on all that later.
We expect the same 6-3 split from the July 30 meeting to repeat September 17, with Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden, and Alan Taylor voting to hold, and Megan Greene, Catherine Mann, and Huw Pill dissenting again in favor of an immediate hike.
Bloomberg 9/17/26
The Bank of England held interest rates at
3.75% while warning that a hike may be needed if inflationary
pressures intensify as a result of conflict in the Middle East.
Six rate-setters chose to leave rates unchanged, including
Governor Andrew Bailey, as the Monetary Policy Committee split
along the same lines as the last meeting in July.
In prepared remarks, Bailey said the global energy shock
has so far had a limited effect on prices and wages in the UK.
“But the longer this volatility persists, the bigger the impact
it will have on inflation, and the more likely it is we will
need to raise Bank rate,” the governor added.