What are the present rates of interest expectations for the main central banks?

• Fed: 54 bps (91% probability of no change at the upcoming meeting)
• ECB: 52 bps (93% probability of rate cut at the upcoming meeting)
• BoE: 45 bps (84% probability of no change at the upcoming meeting)
• BoC: 47 bps (64% probability of rate cut at the upcoming meeting)
• RBA: 73 bps (56% probability of rate cut at the upcoming meeting)
• RBNZ: 58 bps (82% probability of rate cut at the upcoming meeting)
• SNB: 47 bps (81% probability of rate cut at the upcoming meeting)

*for the SNB, the rest of the probability is for a 50 bps cut

Rate hikes by year-end

• BoJ: 17 bps (98% probability of no change at the upcoming meeting)

The pricing remained roughly unchanged for most central banks except the RBA where we saw a more dovish repricing after Governor Bullock’s 50 bps comment today (it was 57 bps before that comment).

We are now at a point where the market got back to previous expectations and from now on we will need stronger reasons to price out the rate cuts. That will obviously move the markets. Of course the same is true for pricing in more rate cuts than currently expected.

This article was written by Giuseppe Dellamotta at www.forexlive.com.