Central Bank policy and macro stance in one view

Bias: Raised the uncollateralized overnight call rate by 25bp to 1.25% on 18 September 2026, the highest since 1995, by a 7-2 vote (Asada and Sato dissenting). The newest official communication is Deputy Governor Himino's 21 October testimony to parliament (Reuters): underlying inflation is 'quite close' to the 2% target and will likely converge to target-consistent levels as medium- and long-term inflation expectations rise, financial conditions remain accommodative even after September's hike (low real borrowing costs, strong bank lending), brisk AI demand is adding upward price pressure, and delaying the necessary adjustment could let inflation risks materialise, so rates need to keep rising. This reinforces Governor Ueda's 19 October parliamentary testimony and Deputy Governor Uchida's 16 October message. Tone stays Hawkish at score 7: the 29-30 October meeting is expected to hold (Kyodo; Reuters poll shows 54 of 78 economists expect 1.50% this quarter) with December the favoured window.

USD/JPY is range-bound near 158.1 (158.0-158.5) with intervention risk concentrated near 160 after the 3 Aug joint US-Japan intervention; MoF's Mimura said Japan is not satisfied with or reassured by recent yen action (21 Oct). Japan's September exports rose 16.7% y/y and imports 18.9% on higher oil prices, leaving a trade deficit of about $3.39bn, nearly triple forecasts. Nikkei 225 closed at 64,696 (+0.97%) today after 64,075 on Tuesday. Next catalysts: national CPI 23 Oct, BoJ decision 29-30 Oct, full September minutes 5 November.

Bias: Held Bank Rate at 3.75% on 17 September 2026 for a sixth straight meeting by a 6-3 vote (Greene, Mann and Pill voting for an immediate 25bp hike). The newest official communication is MPC member Megan Greene's 20 October speech at the LSE (Reuters, BoE): the risk of broader inflation from the Iran-war energy shock is greater than the BoE expects, she reiterated that rates should go up, argued the MPC should 'proactively lean against the risk of second-round effects', said wage growth is running higher than official data suggest, and judged the policy stance not obviously meaningfully restrictive. This reinforces Pill (8 Oct) and Mann (6 Oct) and sits alongside Governor Bailey's more measured 16 October Bangkok remarks ('too early' to judge second-round effects). Markets treat a 25bp hike to 4.00% on 5 November as almost fully priced. Tone stays Hawkish at score 7: Greene is an established hike voter so the committee shift is limited, while the hot September CPI is data rather than communication.

UK September CPI (released 21 Oct, 06:00 UTC) rose to 3.5% y/y vs 3.4% consensus and 3.1% in August; monthly 0.4% vs 0.3% expected; PPI input 8.3% y/y vs 7.2% expected. UK unemployment unexpectedly fell to 4.7% on 20 Oct. Money markets price almost fully a 25bp hike on 5 November (earlier about 90%, 54 of 63 economists); BoE sees CPI near 3.7% in Q4 2026 and above 4% in early 2027. Governor Bailey speaks today at 13:00 UTC; Autumn Budget 28 October; MPC and Monetary Policy Report 5 November. GBP/USD about 1.339 (Tuesday high near 1.3409; the CPI reaction was muted), EUR/GBP about 0.839.

Bias: Hiked the OCR 25bp to 2.75% on 2 September 2026 (second straight hike). The newest official communication is RBNZ's Conway on 15 October, who said the 28 October decision is 'completely open' and that the OCR is more likely to rise than fall, reinforcing the 22 September Breman warning that sustained oil gains would lift inflation above forecasts. This is a firmer message than Silk's 4 September December-hold guidance. Tone stays Hawkish at score 6 given rising unemployment as an offset.

Next decision 28 October. Rising unemployment (5.6% in June) and weak retail sales remain offsetting risks. Q2 inflation of 4.1% y/y and manufacturing PMI of 56.5 support the hiking case. NZD benefits from the fundamental score of 3.8, third highest among the G8.

Bias: Held the overnight rate at 2.25% for a seventh consecutive decision on 2 September 2026. The newest official communication is Governor Macklem's 17 October conference call from Bangkok (Reuters): the Bank expects to raise its inflation forecast significantly on 28 October because of persistently high oil and petroleum-product prices, the risk that inflation broadens and becomes more persistent has gone up, and the Bank is prepared to adjust policy as needed; he also framed the open question as whether inflation returns to 2% on its own or rates must rise to nudge it. Markets price no change on 28 October or in December but about 100bp of hikes over 2027. A hawkish-leaning message, but rising unemployment and US tariff risks keep the stance Neutral at the top of the band, score 2.

Next scheduled decision is 28 October 2026 with the Monetary Policy Report. September CPI (consensus roughly 3.0-3.2% y/y; BoC core gauges ran about 1.9-2.6% in August) and the Q3 Business Outlook Survey publish today at 12:30 and 14:30 UTC, the last big inputs before the decision. Macklem said that if oil stays near $100, inflation should drift up from 3%; Brent was about $107.6 today after the Russia sanctions waiver. Unemployment is 6.5% (September) and business confidence softer; fundamentals remain weak (final fundamental score -0.5).

Bias: The Governing Council raised all three key rates by 25bp on 10 September 2026 (deposit facility 2.50%, main refinancing 2.65%, marginal lending 2.90%). The newest official communications are Governing Council member Kazaks's Econostream interview published on 21 October (some more policy tightening might be necessary if inflation stays well above target, but the recent rise in bond yields is already adding market tightening that will slow growth and curb inflation; no conditions for excessive wage demands; monetary policy cannot cure the French situation) and Bank of Finland Governor Rehn's 20 October monetary policy speech (activity has surprised on the upside but growth momentum remains subdued, the labour market is no longer tight, wage growth is moderate and there is as yet little evidence of second-round effects from energy). They follow Lagarde's 17 October IMFC statement and Bangkok remarks (financing conditions have tightened as long-term rates rose notably; the bond selloff will help curb inflation) and Nagel's 'maybe we have to do more'. October is expected to be a hold, with the 17 December meeting (new projections) the favoured window for a third 2026 hike that would lift the deposit rate to 2.75%. Tone stays Hawkish but intensity is trimmed from 3 to 2: the newest remarks, including from hawk-wing Kazaks who is now explicitly conditional and stresses market-driven tightening, emphasise caution and the absence of second-round effects.

Reuters/LSEG pricing on 20 Oct showed an 87% chance of a December hike with October on hold (deposit rate expected to stay 2.50% on 29 Oct); Bloomberg (17 Oct) says officials prefer a quarterly pace, i.e. 17 December. Eurostat flash HICP for September was 3.8% y/y (core 2.5%) and Lagarde's IMFC statement cites euro area growth of 0.9% in 2026. French fiscal and social stress persists (about 550,000 protesters on 17 Oct, about 1,800 arrests; France-Germany 10Y spread above 130bp; Carrefour cut guidance on 21 Oct citing unrest; French yields pressed recent wides on 22 Oct and Italy's MIB fell 2.5%) and Spain's snap election is on 29 November; Schnabel leaves the Board in January and Lane's term ends in May. EUR/USD traded near 1.122 (-0.11%) on 22 Oct after dipping to about 1.1195 in the European session (52-week low 1.1113 on 14 Oct); EUR/GBP about 0.839 near 17-month lows around 0.837 and EUR/CHF near 0.92. Next catalysts: flash PMIs 23 Oct, ECB decision 29 October.

Bias: The SNB left its policy rate unchanged at 0% on 24 September 2026, as universally expected, while slightly raising its conditional inflation forecast and dialling down its earlier heightened readiness to intervene against rapid franc appreciation. The newest official communication is the SNB's summary of the discussion at the 22-23 September monetary policy assessment, published on 22 October: since June, markets have been driven by renewed Middle East tensions and tighter monetary policy abroad; because the franc's depreciation outweighed the rise in interest rates, monetary conditions had eased overall since June; unemployment rose slightly in Q2 although employment also increased; medium-term inflationary pressure is only slightly higher than in June; and the Governing Board deemed current monetary conditions appropriate to ensure price stability over the medium term. This is consistent with Governing Board member Tschudin's 15 October presentation (conditional inflation forecast 0.7% for 2026, 0.8% for 2027 and 0.8% for 2028, inside the 0-2% price-stability range; widening interest-rate differentials have contributed to CHF depreciation), Vice Chairman Martin's 8 October remarks (no need to change policy for now) and Chairman Schlegel's 26 September SRF interview, so the tone stays Neutral at score 0.

Swiss GDP (sports-adjusted) rose 1.5% q/q in Q2, the strongest since 2021; Swiss CPI for September (1 Oct) was 1.0% y/y. Neither the summary nor Tschudin's slide deck contains explicit forward guidance on a rate move. Consensus among analysts (Nomura, Swiss Bankers Association survey) sees the first hike no earlier than 2027-2028. The franc is bid in the 22 Oct risk-off session (JPY and CHF leading the haven trade; EUR/CHF near 0.92, a three-month low, with May lows near 0.91). Next scheduled assessment is 10 December 2026; the next summary of discussion follows about four weeks after each decision.

Bias: The RBA Monetary Policy Board unanimously raised the cash rate target by 25bp to 4.60% on 29 September 2026, the fourth hike of 2026 and the highest level since 2011. The newest official communication is Deputy Governor Andrew Hauser's 21 October fireside chat at Citi's Australia and New Zealand Investment Conference in Sydney (RBA, ABC): the inflation outlook is 'materially worse' than the RBA forecast, high inflation is becoming entrenched, and another hike as soon as 3 November is in play; he said the economy needs to ease (with unemployment possibly rising towards 5%) and that short-term pain is needed to stop inflation expectations locking in. This is firmer than Assistant Governor Kent's 19 October balanced fireside chat (restrictive-enough debate, softening household demand) and follows the 13 October minutes showing a strong case for hiking. UBS and Goldman Sachs now forecast a November hike (Goldman: 4.85%), although UBS flags the risk of a split vote with external members. Tone stays Hawkish and intensity is lifted from 6 to 7.

Cash rate 4.60%; next decision 3 November (meeting 2-3 Nov) with the Q3 CPI on 28 October the key input. September labour force (15 Oct): employment fell 39.3k and unemployment rose to 4.7%, a five-year high. August monthly CPI rose 4.0% y/y with trimmed mean 3.6% y/y. Westpac consumer sentiment fell 4.7% to 80.4 in October, close to the weakest readings in the survey's history. AUD/USD trades near 0.7017, above 0.7000 and close to its monthly high, after opening Monday near 0.6959; FOREX.com flagged record AUD short bets. AUD remains the weakest-scoring G8 currency on fundamentals (final fundamental score -2.0; manufacturing PMI 49.6, widening current-account deficit).

Bias: The FOMC unanimously (12-0) raised the target range 25bp to 3.75%-4.00% on 16 September 2026, its first hike since July 2023. The newest official communication is Chair Warsh's conversation at the IMF meetings on 16 October, following the hot September CPI/PPI prints; this comes after Williams (13 Oct: one more hike appropriate this year, none needed in 2027), Waller (8 Oct: more hikes needed, not necessarily consecutive) and the 7 October minutes (most of 19 participants saw another increase likely by year-end). Tone stays Hawkish, but intensity is trimmed to 5 because officials are signalling a gradual, data-dependent path (October hold with a December hike remains the base case) rather than an accelerated pace.

September CPI (14 Oct) was hot: headline +0.6% m/m and 3.7% y/y, core 2.6% y/y, with gasoline +9.1% m/m. September payrolls (2 Oct) rose only 29k with unemployment at 4.2%. DXY is near 101.8-101.9 on 16 Oct, off the 18-month high of about 102.57 touched on 13 Oct; the US 10Y yields about 5.07% and the 2Y about 4.73-4.75% (10Y 24-year high of 5.365% on 7 Oct). WTI trades near $97.4. Fed blackout begins 17 October ahead of the FOMC on 27-28 October.