Big Central Banks Are Expected to Hold This Week. The Hikes, If They Come, Wait Until December

The hold

The Federal Reserve, the European Central Bank and the Bank of Japan are likely to hold interest rates at their upcoming meetings, according to Standard Chartered's Rajat Bhattacharya. Emirates NBD research reaches the same conclusion from a different angle: it expects the Federal Reserve to leave rates unchanged on Wednesday and markets to expect the European Central Bank to pause on Thursday. m:…5684 m:…2983

Neither house expects the pause to last. Standard Chartered expects the Federal Reserve and the European Central Bank to hike rates in December, and Emirates NBD also expects a Federal Reserve hike in December, with markets pricing further hikes in 2027. Standard Chartered adds that the Federal Reserve and the European Central Bank will deliver fewer than 60 basis points of hikes over the next twelve months, and that the Bank of Japan will hike by 75 basis points by the end of the first half of 2027. m:…5684 m:…2983

The September round sets the context. The Federal Reserve raised its target rate by 25 basis points to 3.75-4 percent in September, the European Central Bank raised its deposit rate to 2.5 percent, and the Bank of Japan raised its rate to 1.25 percent, a 31-year high. Ten-year government bond yields are now at 20-year highs for G7 economies and 30-year highs for Japan, according to Standard Chartered. m:…5684

Why December still matters

Emirates NBD puts numbers on the tension. The fed funds target range is expected to be 4.00-4.25 percent at year-end, while the core PCE price index is rising at 3 percent a year against the Federal Reserve's 2 percent inflation target. That gap is the case for a December move, and the case for patience is that tighter conditions are already doing some of the work. m:…2983

The officials quoted in the Emirates NBD note point the same way. John Williams favors a measured pace of future rate hikes, and Christopher Waller has stated that rate hikes need not come at consecutive meetings. Read together, that is a committee that can move in December without committing to a run of moves, which matches Standard Chartered's forecast of fewer than 60 basis points over the next year. m:…2983 m:…5684

Meanwhile, liquidity still moves

A pause is not the same as inaction, and India's central bank showed the difference on Monday. The Reserve Bank of India held a 4-day variable rate repo auction on October 26, 2026, drawing bids of 186,666 crore rupees against a notified amount of 150,000 crore rupees. It allotted 150,007 crore rupees at a cut-off rate of 5.55 percent, with a weighted average rate of 5.59 percent and partial allotment of 85.07 percent of bids at the cut-off rate. m:…2145

The spillovers are already visible elsewhere. Emirates NBD notes that French political paralysis is pushing bond spreads over German counterparts near their 2011 high, and that Gulf countries' dollar pegs transmit tighter financial conditions into regional economies. A stronger dollar, in that note's telling, is both a consequence of the pause and a tightening force of its own. m:…2983

This suggests the week to watch is not this one but the next decision round. If the big three hold as expected, the market's attention moves straight to December, and to whether the data between now and then supports one more hike or a longer hold. The repo auction is a reminder that, underneath the headline decisions, central banks keep managing liquidity day by day. m:…5684 m:…2145