Rate cuts by year-end
- Fed: 54 bps (86% probability of no change at the upcoming meeting)
- BoE: 43 bps (87% probability of no change at the upcoming meeting)
- ECB: 1 bps (99% probability of no change at the upcoming meeting)
Rate hikes by year-end
- BoC: 13 bps (88% probability of no change at the upcoming meeting)
- BoJ: 35 bps (97% probability of no change at the upcoming meeting)
- RBA: 32 bps (76% probability of no change at the upcoming meeting)
- RBNZ: 33 bps (98% probability of no change at the upcoming meeting)
- SNB: 4 bps (100% probability of no change at the upcoming meeting)
We started the year with some slightly dovish changes in terms of market pricing. For the ECB, the market was pricing 10 bps of tightening in 2026 in December, but that turned into 1 bps of easing following the soft inflation data. The expectations remain pretty much unchanged for the Fed and the BoE, which stand on the most dovish side of the spectrum in terms of market pricing.
For the BoJ, we saw a bit of a dovish repricing following soft Tokyo CPI, weak wage growth data and some geopolitical tensions between China and Japan. The same goes for the BoC as the softer than expected Canadian inflation report in December took the pricing from 25 bps of tightening to 13 bps now.
Lastly, we had a slightly dovish repricing for the RBA following the recent softer Australia’s monthly inflation, although the core inflation figures remained firm.
