July Rate Expectations: No Moves Expect for ECB in 2011

July 5, 2011

The latest economic developments have caused investors to push out their rate expectations for all of the major central banks. In May, the ECB, BoC and RBA were all expected to raise rates before the end of the year and now aside from the ECB no one is expected to tighten. Rate expectations are always changing and a lot has happened over the past month. It is always important to keep track of them because they reflect what investors are pricing in!

Here are the latest numbers and highlights (compared to May - click to enlarge)

Fed - One 25bp rate hike expected by Q2 2012
ECB - 50bp of additional tightening expected by end of year
BoE - First Rate hike expected in May > compared to prior forecast for 25bp rate hike in Jan
RBA - No rate hike within the next year - major downgrade from past expectations
RBNZ - One rate hike in March 2012 > pushed out from Jan 2012
BoC - 25bp rate hike in Feb > pushed out from Oct