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Interest rates
Fed holds rates steady as outlook improves
The United States Federal Reserve left its benchmark interest rate unchanged on Wednesday (Thursday AEDT), pausing a recent easing cycle as policymakers signalled a firmer economic outlook and reduced concern over labour market weakness. The Federal Open Market Committee (FOMC) voted to maintain the federal funds rate in a target range of 3.5%–3.75%, in line with market expectations. The decision followed three consecutive quarter-point cuts that officials had characterised as precautionary adjustments aimed at cushioning potential softness in employment. In its post-meeting statement, the central bank upgraded its assessment of economic activity while indicating that risks to its dual mandate of price stability and maximum employment are now more balanced. “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilisation,” the central bank said in its post-meeting statement, adding that “Inflation remains somewhat elevated”. The statement also removed earlier language suggesting greater concern about labour market deterioration than inflation pressures. That shift in tone points to a near-term paus
Interest rates
Economists see increasing chance of RBA rate hike
The odds of the Reserve Bank of Australia (RBA) lifting interest rates in February are increasing as the Australian economy strengthens, with inflation data due out on Wednesday likely to be crucial in the decision, according to market economists. The likelihood of a 25 basis point increase in the official cash rate to 3.85% at the RBA's next meeting on 3 February has increased to 56% from 22% since 16 January, according to the Australian Securities Exchange’s RBA Rate Tracker. This has been driven by data, including inflation and jobs numbers published in October and earlier this month, showing the Australian economy is stronger than previously believed. The chances of a rate increase rose to 60% on 22 January when the Australian Bureau of Statistics (ABS) announced unemployment fell to 4.1% in December from 4.3% in November, while employment rose by more than twice the forecast. Last October, the ABS announced the consumer price index (CPI) rose 1.3% in the September quarter of 2025, the highest rate since March 2023, and to 3.2% annually, according to the latest data from the Australian Bureau of Statistics (ABS). Goldman Sachs said the stronger inflation and labour market meant a rate hike was “quite possible bu
Interest rates
Central bankers unite in solidarity with Fed chair
While it is rare for the Reserve Bank of Australia (RBA) to enter the political arena, Governor Michele Bullock had no reservations about wading in with her size 10s in support of her Federal Reserve (The Fed) peer following serious accusations by United States President Donald Trump. Bullock has publicly rejected the decision by the U.S. Department of Justice (DOJ) on 11 January 2026 to serve the Fed Chair Jerome Powell with grand jury subpoenas as part of a criminal investigation into allegations he misled Congress. The DOJ’s criminal investigation has nothing to do with his running of the U.S. central bank and more to do with construction. The DOJ claims Powell knowingly made fraudulent or misleading statements to the Senate Banking Committee in relation to a multi-billion dollar renovation of the Fed's Washington, D.C. headquarters. Playing out as a confounding backdrop to these allegations are revelations that the projected cost of the new White House ballroom has doubled since it was first announced by the U.S. president in July 2025. Powell hits back What appears to have ruffled the feathers of the Trump Administration were revelations by the Office of Management and Budget that Powell was leading an "ost
Interest rates
BOJ raises interest rates to highest in three decades
The Bank of Japan has raised its short-term rates to the highest level in three decades, as inflation has remained above its target level for nearly four years. The bank increased its benchmark by a quarter of a percentage point to around 0.75% in a much-anticipated decision. This is the highest it has been since 1995. This comes as Prime Minister Sanae Takaichi is keen to bring inflation down, but also needs the cost of government borrowing to be cheap. It was also the first time the central bank hiked rates since January, and the first under Takaichi and governor Kazuo Ueda took up their current role. Data released this month showed that Japanese inflation has remained above the target level of 2% for 44 months. It came to 2.9% in November, a drop from 3% in October. High inflation has pressured real wages that have been declining for 10 months in a row, according to labour ministry data. The BOJ predicts that core inflation is likely to decelerate below 2% from April to September 2026, due to a slower rise in good prices as well as the effects of government measures aimed at addressing rising prices. In a statement, the BOJ said while weakness has been seen in the economy, corporate profits are likely to re
Interest rates
Bank of England cuts interest rates ahead of holidays
The Bank of England has cut interest rates to its lowest levels since 2023, in a close decision vote with 5 to 4 in favour. With the vote going through, the rates now sit at 3.75%, down from 4%. Concerns about weak economic growth and rising unemployment have outweighed inflation worries, with price pressures easing but still above the Bank’s 2% target. Policymakers expect inflation to approach 2% by mid-next year, partly due to tax and spending measures in last month’s Budget. The Bank's next meeting to examine interest rates is on February 5th, while concerns about inflation and rising unemployment persist. Inflation in Britain is expected to reach the Bank's 2% target by the middle of next year, and interest rates are likely to continue trending downward as well. "We still think rates are on a gradual path downward but with every cut we make, how much further we go becomes a closer call," said the Bank's governor, Andrew Bailey.

Interest rates
Fed delivers third cut; signals slower path ahead
The United States Federal Reserve approved its third interest rate reduction of the year on Wednesday (Thursday AEDT), but the move underscored deep divisions within the central bank and hinted at a far more cautious pace of easing ahead. In a 9-3 decision, the Federal Open Market Committee (FOMC) lowered its benchmark federal funds rate by a quarter percentage point to a range of 3.5%-3.75%, delivering what markets had widely dubbed a “hawkish cut”. The decision was accompanied by an unusually large number of dissents, highlighting an internal struggle over the appropriate direction for monetary policy. Three policymakers voted against the move, the first time such a split has appeared since September 2019, with Governor Stephen Miran pushing for a larger half-point cut, while Kansas City President Jeffrey Schmid and Chicago’s Austan Goolsbee preferred to hold rates steady. The disagreement reflects the broader ideological divide within the Fed. Hawks remain focused on persistent inflation pressures, advocating for tighter policy, while doves argue that a cooling labour market warrants more support. Miran, who is set to leave the Fed in January, registered his third consecutive “no” vote, while Schmid dissented for th
Interest rates
RBA holds rates steady amid rising inflation
The Reserve Bank of Australia (RBA) has unanimously agreed to hold cash rates steady at 3.6%, citing caution as inflation rises. The decision follows an increase in inflation in October and an uptick in annual economic growth rates last quarter. The RBA last cut interest rates in August, with rates being lowered by 0.75% across 2025. “The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,” wrote the RBA Governance Board. “Private demand is recovering. Labour market conditions still appear a little tight but further modest easing is expected. The Board therefore judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve.” October’s increase in underlying inflation was likely “due to temporary factors and there is uncertainty about how much signal to take from the monthly CPI data", the Board wrote. “Nevertheless, the data do suggest some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring.” The Board did not consider cutting rates this meeting, RBA Governor Michele Bullock said at a press conference, and it d
Interest rates
BOJ faces catch-22 as govt bond yields hit new highs
With borrowing costs rising rapidly and government bond yields surging to levels unseen in decades, the Bank of Japan (BOJ) is confronted with nudging interest rates higher - risking even steeper yields and more pressure on a fragile economy - or pausing, possibly even easing, which could fan inflation. Yields on Japanese government bonds have been climbing steadily, with the 10-year benchmark touching 1.917% on Thursday, the highest since 2007. Longer-dated bonds have followed suit: the 20-year hit 2.936%, a level last reached in 1999, while the 30-year rose to a record 3.436%, according to LSEG data. The BOJ scrapped its long-running yield curve control framework in March 2024, abandoning the cap that kept 10-year yields around 1%. While that shift coincided with the end of Japan’s negative interest rate era, inflation has now stayed above the bank’s 2% target for more than three and a half years, This is adding pressure on policymakers to tighten further as higher yields threaten to spiral. Analysts warn that a return to aggressive bond-buying or yield caps could weaken the yen again, pushing up the price of imports, a problem Japan is already dealing with. Meanwhile, rising yields inflate the government’s
Interest rates
Patient RBA says future rate changes depend on data
The Reserve Bank of Australia (RBA) believed it could continue to be patient about changing interest rates, with future decisions to be driven by economic data, according to the Minutes of the last RBA Monetary Policy Board meeting published on Tuesday. The RBA decided to leave the official cash rate unchanged at 3.60% at its November meeting because the September inflation increase had been larger than expected, the labour market was tight, and the effects of previous rate cuts were not apparent yet. The Board’s strategy to be guided by data and remain cautious could imply a more gradual easing in policy than had been assumed in the August forecasts if certain conditions materialised. “Given that, Members determined that they could afford to be patient while assessing what the incoming data reveal about their judgements on the extent of spare capacity, the outlook for the labour market and the degree of restrictiveness of monetary policy,” the Board said. The market pricing used to condition RBA forecasts implied no further cuts in the cash rate in 2025 and one cut of 25 basis points by late 2026, and more than half of market economists did expect rate cuts in 2025 or 2026, the Minutes said. Board Member observatio