Key facts
- The Bank of England raised its policy rate to 4% on Thursday, its first increase in more than three years.
- The Reserve Bank of Australia raised its cash rate to 4.85% this week, the highest level in 18 years.
- The Bank of Canada raised rates by 25 basis points to 2.5% last week, its first increase in more than three years.
- Sweden's Riksbank raised its policy rate to 2% on Wednesday, its first increase since 2023.
- The Federal Reserve left rates unchanged last week, awaiting further evidence on inflation.
- The European Central Bank left rates unchanged last week but warned inflation risks were rising.
The Bank of England raised its policy rate to 4% on Thursday, its first increase in more than three years, as several major central banks tightened this week while sitting at different stages of the cycle, Reuters reported on November 5.
The BoE said at least one further increase was likely if the Middle East conflict continues and projected British inflation would rise to around 5% in mid-2027. All members of the Monetary Policy Committee voted to raise rates, with one backing a larger increase.
The Reserve Bank of Australia raised its cash rate to 4.85% this week, the highest level in 18 years. The vote was unexpectedly close and the bank struck a less hawkish tone, suggesting policymakers may be nearing the end of its tightening campaign. Markets are not pricing in further increases.
Norges Bank left rates unchanged on Thursday, as expected, after raising them twice this year. It reiterated that further tightening remains possible to contain inflation, noting that conflict in the Middle East continues to create uncertainty over the outlook for prices.
The Federal Reserve left rates unchanged last week, awaiting further evidence on inflation, which it said remained elevated. President Donald Trump has repeatedly called for lower rates and accused policymakers of being "hostile" and "partisan" after September's rate increase. Fed Chair Kevin Warsh rejected those accusations, stressing the central bank's independence. Markets are pricing an 80% chance of a rate increase in December and expect further tightening in 2027.
The Reserve Bank of New Zealand surprised markets last week by keeping its official cash rate at 2.75% in a narrow vote rather than delivering a third consecutive increase. Governor Anna Breman said the chances of a rate rise in December were "high".
The European Central Bank left rates unchanged last week but warned inflation risks were rising. Data on Wednesday showed inflation accelerated to a three-year high in October. Policymakers are also monitoring a sharp rise in France's debt risk premium, driven by investor concerns about the country's debt burden and uncertain fiscal outlook. ECB President Christine Lagarde also announced her early resignation.
The Bank of Canada raised its key rate for the first time in more than three years last week, as expected, but Governor Tiff Macklem said policy remained slightly accommodative. The bank raised rates by 25 basis points to 2.5%, still below the 2.75% level it estimates is neither restrictive nor expansionary for the economy.