Rate cuts by year-end
- Fed: 44 bps (92% probability of rate cut at the upcoming meeting)
2026: 113 bps
- ECB: 4 bps (99% probability of no change at the upcoming meeting)
2026: 10 bps
- BoE: 7 bps (94% probability of no change at the upcoming meeting)
2026: 40 bps
- BoC: 20 bps (52% probability of no change at the upcoming meeting)
2026: 32 bps
- RBA: 30 bps (81% probability of no change at the upcoming meeting)
2026: 52 bps
- RBNZ: 58 bps (78% probability of rate cut at the upcoming meeting; the rest for a 50 bps cut)
2026: 70 bps
- SNB: 4 bps (95% probability of no change at the upcoming meeting)
2026: 8 bps
Rate hikes by year-end
- BoJ: 18 bps (56% probability of no change at the upcoming meeting)
2026: 53 bps
*The 2026 pricing reflects the cumulative easing expected by the end of 2026, not how much easing is expected in 2026 alone.
We got a very slightly hawkish repricing for the Fed but the market is still clearly disagreeing with the Fed's forecast. The Fed projected 75 bps more of easing by the end of 2026, while the market is pricing 113 bps. That's a significant mispricing and could be closed if we get strong US data in the next weeks and months. We had a similar mispricing last year and eventually it was the market who was wrong. Will it be wrong this time again?
We had also a notably dovish repricing for the RBNZ after the New Zealand GDP data surprised to the downside by a big margin. Given that the central bank was surprisingly dovish the last time, the market is now pricing good chances of a 50 bps cut at the upcoming meeting.
Finally, the market got surprised by the two dissents on the BoJ decision. In fact, two board members, Takata and Tamura, voted for a 25 bps hike at this meeting already. Overall, the market pricing didn't change much given that we were already expecting a hike by the end of the year and it's not a big difference if it's going to be in October or December. Governor Ueda has also downplayed the dissents in the press conference.
