Interest rate expectations for the Fed remain the most dovish among major central banks

Rate cuts by year-end (2026)

• Fed: 61 bps (76% probability of no change at the upcoming meeting)
• BoE: 36 bps (90% probability of no change at the upcoming meeting)

Rate hikes by year-end (2026)

• BoC: 22 bps (94% probability of no change at the upcoming meeting)
• ECB: 6 bps (97% probability of no change at the upcoming meeting)
• BoJ: 49 bps (96% probability of no change at the upcoming meeting)
• RBA: 40 bps (76% probability of no change at the upcoming meeting)
• RBNZ: 41 bps (98% probability of no change at the upcoming meeting)
• SNB: 7 bps (97% probability of no change at the upcoming meeting)

This week we had a few central bank policy announcements, but the market pricing didn’t change much following the releases. In fact, the central banks just delivered on expectations and didn’t offer much in terms of forward guidance, keeping market bets steady.

The main events though, were the US NFP and CPI reports. Both came out much softer than expected but were taken with a pinch of salt given the shutdown related issues. Nonetheless, the market pricing turned a bit more dovish on the Fed, with the total easing for 2026 going from 56 bps to 61 bps.

Next month we’ll get a clearer picture on the US labour market and inflation. If the data were to come out soft again, or at least validate what we’ve seen this week, then the Fed might cut much sooner than expected.