The Federal Reserve raised its policy rate to 3.75% as of September 25, 2026, marking the first increase since July 2023 and reflecting a unanimous FOMC decision to tighten monetary policy amid elevated inflation. This move follows a September 16 rate hike to a target range of 3.75–4.00% and aligns with Chairman Kevin Warsh’s stance against forward guidance, signaling a shift toward data-dependent tightening. [1][2][3]
The Bank of Japan raised its policy rate to 1.25% on September 18, 2026, achieving a 31-year high and marking its first rate increase in years, with a 7-2 vote where dissenters preferred no change. This decision was widely anticipated, with market pricing showing near 100% probability for the hike and Reuters sources confirming the move as early as September 11. [4][5][6][7][8]
The European Central Bank is near-unanimously expected to raise its deposit rate by 25 basis points to 2.50% at its September 10 meeting, marking its second consecutive hike in the current cycle, with 65 economists polled by Reuters all forecasting the increase. This follows strong market pricing, with overnight index swaps indicating a 96% probability for the ECB hike as of August 25. [9][10][11]
The Bank of England held its rate at 3.75% on September 17, 2026, with a 6-3 vote, as three MPC members dissented by voting for an immediate hike, reflecting internal debate over inflation persistence. Despite the hold, Governor Andrew Bailey had previously denied a secret plan to raise rates, conditioning future moves on whether oil prices translate into lasting domestic pressures. [12][13][14][15]
Australia is positioned to become the fourth major central bank to tighten within two weeks, with the Big Four banks unanimously forecasting a 25bp hike to 4.60% as of September 22, marking the first cycle alignment among them, and Westpac projecting a further November increase to 4.85%. [16][17][18]
Market indicators to watch include the persistence of sticky inflation and Brent oil prices above $100, which Governor Bullock cited as upward pressure on rates, alongside yen strength influencing cross-border investment and hedging costs for sovereign wealth funds. [19][20][21]}