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Highlights
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.
We expect the Fed’s reaction function will shift considerably more hawkish compared to June. We project the median 2026 dot will be for two rate hikes, with the overall distribution moving higher. This change in policy is fundamentally about providing a minimally credible policy outlook given the economic outlook and persistently high inflation. Essentially it is a correction for the June SEP which implied a considerably more dovish reaction function given participants raised their economic but not policy outlooks.
Financial Review 9/16/26
Washington | The Federal Reserve raised interest rates and flagged further increases in borrowing costs in coming months, with new US central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration’s inability so far to control inflation.
New policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year, with only two of them seeing rates remaining stable from here. Warsh apparently again did not submit a rate projection.
Another Step Toward Being Backed Into a Hike
While the outcome of the September FOMC meeting still hinges on Friday’s CPI number, today’s PPI number may help Fed Chair Kevin Warsh lead a reluctant FOMC to hike rates into a fresh oil shock with Fed Governor Chris Waller, ironically, providing the key guidance that helps secure a hike.
Wall Street Journal — WASHINGTON 9/16/26
The Federal Reserve raised interest rates Wednesday for the first time in three years, a sharp reversal that began taking back cuts it made last year and implicitly undercut the White House’s insistence that inflation isn’t a concern.
The increase, approved unanimously, will raise the benchmark federal-funds rate range by a quarter point to between 3.75% and 4%. The vast majority of officials penciled in one more hike this year in interest-rate projections released after their meeting.