How have interest rates expectations changed after this week’s data?

• Fed: 51 bps (95% probability of no change at the upcoming meeting)
• ECB: 52 bps (94% probability of rate cut at the upcoming meeting)
• BoE: 39 bps (94% probability of no change at the upcoming meeting)
• BoC: 34 bps (70% probability of no change at the upcoming meeting)
• RBA: 68 bps (57% probability of rate cut at the upcoming meeting)
• RBNZ: 60 bps (90% probability of rate cut at the upcoming meeting)
• SNB: 50 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: 15 bps (98% probability of no change at the upcoming meeting)

The key events that weighed on the market pricing this week were:

• RBA’s Bullock mentioning that they did discuss a 50 bps cut. That saw the market increasing the rate cut bets for the RBA from 54 bps to 68 bps by year-end.
• Canadian Core inflation data surprising to the upside. That caused the market to price out immediately a rate cut in June that was expected before the CPI release.
• Hot UK CPI data. The market took a less dovish view and favoured just one rate cut in 2025.

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