The 'Super Central Bank Week' is here! Japan leads with an interest rate hike; the 'easing cycle' among advanced-economy central banks is coming to an end—will the Fed be left 'cutting rates alone' next year?

Supporting this decision will be Monday’s release of the Bank of Japan’s Tankan survey. Market expectations are that the survey will show continued improvement in business confidence among large manufacturers for the three months ending December—bolstering the case for monetary tightening. Japanese authorities have already signaled repeatedly through various channels, aiming to prepare investors for a rate hike. Additionally, Japan’s November CPI data—due next Friday—are expected to show core CPI remaining elevated at a 3.0% year-on-year pace, further paving the way for a BOJ rate increase. ECB to Hold Rates Steady; UK May Deliver Its 'Last Cut' In contrast to Japan’s tightening stance, the Bank of England (BOE) is expected to ease policy—but possibly for the final time. According to a Bloomberg survey of economists, all respondents forecast a BOE rate cut this Thursday. The key market question is whether Governor Andrew Bailey—who dissented at the previous meeting—will now vote in favor of easing. Regardless of the outcome, analysts broadly view this as likely one of the last few actions in the BOE’s current easing cycle, signaling a shift in its policy focus. Meanwhile, the European Central Bank (ECB) is widely expected to hold rates steady. Bloomberg Economics’ proprietary ECBspeak sentiment index shows hawkish officials currently prevailing—virtually guaranteeing no change at the December meeting. Markets will closely watch President Christine Lagarde’s speech and the ECB’s latest quarterly projections for clues on when a potential pivot toward tightening might occur. Elsewhere in Europe, central banks in Sweden, Norway, and the Czech Republic are also expected to keep rates unchanged at their meetings this week. Will the Fed Be Left 'Cutting Alone'? The U.S. Federal Reserve recently cut rates by 25 basis points as widely anticipated, and markets broadly expect it to maintain an accommodative stance next year. Morgan Stanley and Citigroup forecast another cut in January, judging the easing cycle not yet over. Goldman Sachs and Barclays note that the hawkish language in the Fed’s policy statement was intended to ‘balance’ this cut and avoid sending overly dovish signals. Citigroup, Morgan Stanley, and JPMorgan Chase all point to January as the timing for the first cut next year: Citigroup expects a second cut in March; Morgan Stanley anticipates the second cut in April; while JPMorgan believes policy will then enter a pause period for observation. Policy Divergence: Advanced Economies ‘Braking’, Emerging Markets ‘Accelerating’ The global monetary policy landscape is growing increasingly complex and fragmented. As easing momentum wanes among advanced economies, central banks elsewhere continue advancing along the easing path. According to Bloomberg, Thailand’s central bank (BOT) is expected to cut rates by 25 bps on Wednesday, while economists remain divided on whether Indonesia’s central bank (BI) will follow suit. In Latin America, policy divergence is equally pronounced. Chile’s and Mexico’s central banks are expected to cut rates this week amid economic pressures. By contrast, Colombia’s central bank—following an inflation report better than expected—may opt to hold its benchmark rate steady at 9.25%.

A growing north–south divergence in monetary policy is emerging.

After holding rates steady in early August, the Reserve Bank of Australia (RBA) forecasts that although inflation is declining, it will still take 24 months—or even longer—to fall from its current 6% level into the target range of 2%–3%, and the path remains uncertain. The RBA also stated it will assess the lagged effects of prior rate hikes and may need to tighten policy further. Emerging Markets Enter Their Easing Cycle While central banks in advanced economies continue hiking rates and maintaining restrictive policies, more and more investors are noticing starkly different monetary policy stances across emerging markets. Having adopted more aggressive measures against inflation since early 2021, most emerging markets have experienced more pronounced disinflation. Consequently, data released by the Bank for International Settlements (BIS) at the end of July showed that, since the start of this year, 11 central banks—including those of Brazil, Chile, and Indonesia—have either eased policy further or held benchmark rates steady. India, Morocco, Mexico, and Malaysia, having raised rates earlier this year, have since kept them unchanged. Meanwhile, central banks in the Philippines, Thailand, South Africa, and Serbia remain on a hiking path, having delivered two consecutive rate increases. Data indicate that, as of end-July, emerging-market central banks collectively implemented 24 rate hikes totaling 1,725 basis points—a figure far below the 92 hikes and 7,425 basis points recorded in 2022. Looking ahead, most emerging-market central banks—including those of Indonesia, Mexico, South Africa, India, and Poland—are expected to hold benchmark rates steady and opportunistically begin easing once the Fed abandons its persistent hiking stance or signals future rate cuts. In contrast, some emerging economies—such as Brazil and Chile—have clearly outpaced advanced economies in using rate hikes to curb inflation, creating a generational gap relative to the Fed’s monetary cycle—and have already entered a rate-cutting phase to stimulate growth. Moreover, Fitch’s Geographical Distribution Index of Monetary Policy Direction shows that, among the world’s 39 major central banks, the share of emerging-market central banks currently engaged in either hiking or cutting has dropped sharply, whereas that share remains high among advanced-market central banks. The Impact of North–South Divergence Is Becoming Apparent Looking forward, major global investment institutions—including BlackRock, JPMorgan Chase, and UBS—remain optimistic about interest-rate cuts in emerging markets during the second half of the year, citing significant progress in inflation reduction. They anticipate continued easing and accommodative conditions—especially among central banks that began hiking before the Fed launched its tightening cycle, thereby retaining greater room for rate cuts. Today, the impact of divergent monetary policy paths between advanced and emerging economies is becoming evident. First, it is driving a growth divergence between emerging and advanced economies. Over the near term, advanced-market central banks will sustain high interest rates to suppress demand and tame inflation, while emerging-market central banks will launch a new round of easing. With the global reopening underway, emerging economies’ growth momentum is expected to significantly outpace that of advanced economies. Stronger growth may also provide more effective support for emerging-market currencies. Some investment institutions believe that emerging markets’ economic growth this year will substantially exceed that of advanced markets—and will remain relatively robust in 2024.

Chile Central Bank Cuts 2026 GDP Forecast, Slightly Raises Inflation View

Jun 17, 2026

Chile's central bank cut its 2026 GDP forecast due to weak copper mining and agriculture performance, while raising inflation views driven by fuel costs. Copper price forecasts were also increased for 2026-2028 amidst strong global demand.

reuters

2026-06-17

Chile Central Bank Cuts 2026 GDP Forecast, Slightly Raises Inflation View

Chile Central Bank Cuts 2026 GDP Forecast, Slightly Raises Inflation View

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