Fed, ECB, BoE, SNB Hold Rates Amid Iran Energy Shock
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- Federal Reserve is expected to leave its benchmark policy rate in the 3.5%–3.75% range after its meeting this week, reflecting heightened uncertainty about inflation and growth.
- European Central Bank is projected to keep policy steady, while longer‑term eurozone bond yields have been volatile as investors weigh higher oil‑price inflation against growth risks.
- Bank of England faces heightened upside inflation risk from rising fuel costs, reducing the likelihood of an imminent rate cut despite a cooling labor market and stagnant GDP.
- Swiss National Bank is anticipated to hold rates steady, though economists note the balance of risks has shifted toward higher inflation if the energy shock intensifies.
- U.S. Treasury two‑year yields have risen roughly 25 basis points over the past month as traders push back the timing of Fed rate cuts in response to renewed inflation pressures.
- Goldman Sachs analysts estimate the oil‑price surge could shave several tenths of a percentage point from global growth over the next year while lifting headline inflation across major economies.
- Michele Morganti of Generali Asset Management says the current energy shock is more contained than 2022, with the global economy on a better footing and central banks already in neutral territory.
Why it matters: Higher energy costs raise headline inflation, prompting central banks to hold rates longer, which squeezes households and businesses through higher borrowing costs while curbing growth, altering investment and consumption decisions worldwide and increasing uncertainty for investors and policymakers and reshaping monetary policy expectations.
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