Barclays analysts warn tighter monetary policy from major central banks may curb liquidity and pressure global equities.
Major central banks are adopting a more restrictive monetary stance, signaling renewed focus on inflation control. The European Central Bank raised rates for the first time since 2023, while the Bank of Japan hiked borrowing costs to their highest level since 1995, citing energy market disruptions linked to the Iran conflict.
The U.S. Federal Reserve held rates steady but shifted to a firmer tone, with nine officials now projecting at least one rate increase by year-end, up from none in March. The Fed’s latest statement also omitted its traditional emphasis on maximum employment, underscoring its inflation-fighting priority. The Bank of England maintained rates but retained a hawkish bias despite softer inflation and labor data.
Analysts suggest the policy shift could reduce liquidity support for equities, potentially challenging recent market momentum.