The central banks of the United States, Europe and Japan are expected to close out a hawkish year by tightening monetary policy in December, according to Anadolu Agency (AA), after briefly adopting a wait-and-see approach in October. The Federal Reserve, the European Central Bank (ECB) and the Bank of Japan all kept interest rates unchanged in October, but persistent inflation and rising energy prices have increased pressure for further rate hikes. In the United States, the Fed maintained its policy rate in the 3.75%-4% range on October 28 in a 10-2 vote.
Fed Chair Kevin Warsh said inflation remains too high, a remark that prompted money markets to price in a 73% probability of a 25-basis-point rate hike on December 9. According to AA, the US economy's hotter-than-expected growth and stubbornly high consumer spending have narrowed the Fed's room to maneuver on monetary policy. In Europe, rising oil and natural gas prices linked to tensions in the Middle East are driving up inflationary pressures by increasing production and transportation costs.
Money market estimates give the ECB an 87% probability of a rate hike in December, an expectation reinforced by recent hawkish signals from ECB President Christine Lagarde. The ECB also said Lagarde will step down early on February 7, 2027, ahead of her scheduled departure in October, so the tightening cycle coincides with leadership uncertainty. The Bank of England is almost certain to raise its policy rate by 25 basis points on Thursday, according to AA, with markets expecting additional hikes next month and in February 2027.
In Japan, the Bank of Japan kept its rate steady at 1.25% at the end of October while revising its year-end inflation-adjusted growth forecast upward to a range of 0.7%-0.8%. Governor Kazuo Ueda recently suggested a forthcoming policy reassessment, which supports market expectations of another imminent rate hike. The article is based on reporting by Ali Canberk Özbuğutu for Anadolu Agency, published on November 3, 2026.
Source: aa.com.tr