Four major central banks remain in tightening mode, with markets pricing further hikes despite cooling energy prices.
Central banks in the G10 economies are maintaining a hawkish stance, with four already raising rates and others prepared to act if inflation persists. The Reserve Bank of Australia leads with a 4.35% policy rate after three hikes this year, fully reversing last year’s cuts. Markets see a 50% chance of another increase later in 2024.
Norway’s Norges Bank held rates at 4.25% but signaled a likely hike later this year, citing stubborn core inflation at 3.4%. The Bank of England paused at 3.75% in June but warned inflation risks remain unresolved. The U.S. Federal Reserve and others have indicated readiness to tighten further if needed.
The recent U.S.-Iran agreement and lower oil prices have eased energy-driven inflation fears, but central banks remain cautious about broader price pressures. Financial conditions are tightening, with policymakers prioritizing inflation control over growth concerns.