The US Federal Reserve, ECB and Bank of Japan are expected to hold policy rates this week, shifting the market’s focus to signals of further rate hikes and France’s fiscal problems. With meetings by the Bank of Canada and the Reserve Bank of New Zealand also taking place, signals from each central bank could have broader repercussions.
This week will be a “super central bank week” for global financial markets, with the US Federal Reserve, ECB and Bank of Japan announcing their rate decisions in succession from 28 to 30 October. What will move the bond and foreign exchange markets is not the holds themselves, but the signals each central bank gives on future rate hikes and whether turmoil in France’s fiscal and bond markets will influence the ECB’s policy direction.
The FRB will announce its decision on 28 October local time. The September federal funds target range was 3.75%–4.00%, and expectations are strong that it will be left unchanged. Many also expect another rate hike in December. Market participants have priced in a hold this week, but say markets could move depending on future comments.
The ECB is expected to announce its decision on 29 October, with the market expecting it to leave the deposit facility rate unchanged at 2.50%. The rise in French government bond yields has attracted attention, and there is close interest in whether the activation of TPI and France’s fiscal risks could influence the ECB’s next move.
The Bank of Japan will announce its decision on 30 October, along with its quarterly economic outlook. While the market broadly expects rates to remain unchanged, the focus could be on the sustainability of price pressures caused by the weaker yen and any revision to the core inflation outlook for fiscal 2027.