Overview
- The Federal Reserve unanimously held its policy rate at 3.50–3.75% at Kevin Warsh’s first meeting on Wednesday and said it will stay vigilant while launching internal reform workstreams.
- The Bank of Japan raised its short-term rate to 1.00% in a 7–1 vote on Tuesday, the highest level since 1995, and said it will stop further tapering of bond purchases after April 2027.
- The European Central Bank raised its deposit rate by 25 basis points last week to 2.25% in response to rising inflation in the euro area.
- Markets and UK economists expect the Bank of England to keep its rate at 3.75% for now as policymakers weigh higher energy costs against weaker growth and a softer labour market.
- Higher energy prices from the Iran war are feeding inflation with a lag so central banks face a trade-off between tightening to protect price stability and avoiding harm to households, businesses, and jobs; investors should watch oil flows, central-bank guidance, and incoming inflation data for signs of a policy shift.