Three major central banks raise rates, signaling further hikes

The Bank of Japan raised rates on Friday, the Federal Reserve did so two days earlier and the European Central Bank lifted rates last week, marking three major central bank tightening moves. Fed projections show policymakers expect a 4.25‑4.50 percent policy rate range by the end of 2027.

Updated quarterly economic projections showed 16 of 18 Federal Reserve policymakers anticipate at least one more quarter‑percentage‑point increase by the end of this year. The Bank of England kept its rate unchanged this week but warned that inflation pressures could require further action. ECB Vice President Boris Vujcic told Reuters that energy prices are expected to stay elevated for longer and that future policy decisions will be made on a meeting‑by‑meeting basis. JPMorgan’s Greg Fuzesi said the peak in rates remains uncomfortably dependent on Middle East events, noting that a hike above 3 percent cannot be ruled out.

“Our policy phase has changed,” Kazuo Ueda, Governor of the Bank of Japan said.

“The peak in rates is uncomfortably dependent on events in the Middle East; a hike above 3 per cent cannot be ruled out entirely,” Greg Fuzesi, JPMorgan said.

A month ago, a short‑lived pact between the United States and Iran had encouraged investors and policymakers to bet on easing hostilities and a retreat of energy prices. The breakdown of the US‑Iran accord and the Houthi advance along the Red Sea have worsened the outlook for oil supplies.

What we know

The Bank of Japan raised rates on Friday.
The Federal Reserve raised rates two days before Friday.
The European Central Bank raised rates last week.
Fed projections show policymakers expect a 4.25‑4.50 percent policy rate range by the end of 2027.
Updated quarterly economic projections showed 16 of 18 policymakers anticipate at least one more quarter‑percentage‑point hike by the end of this year.