Major central banks left interest rates unchanged this week but warned that they could raise them soon to prevent a jump in energy prices, caused by the U.S.-Israeli war with Iran, spilling over into a surge in broader inflation.
The U.S. Federal Reserve (Fed) kept rates steady, but three policymakers felt the reference to an "easing bias" in the policy statement was no longer appropriate, while central banks in Europe and Japan hinted that they will hike rates at upcoming meetings.
Here's where the 10 developed market central banks stand, ranked from the highest policy rate to the lowest:
The Reserve Bank of Australia (RBA) has raised rates twice this year, now to 4.1% – the highest rate in the G-10. Markets see around an 80% chance it'll hike again next week, and expect at least two increases by year-end.
Inflation is running hot. Wednesday data showed headline inflation at 4.1% in the first quarter compared to a year earlier, well above the RBA's 2-3% target range, though the core measure, at 3.5%, offered a modicum of relief.
Norges Bank also meets next week, having said it may raise rates once or twice this year to rein in renewed inflation pressures from strong wage growth and higher energy costs.
It kept rates on hold in March at 4%.
Core inflation, at around 3% in March, has exceeded its target of 2% each month since early 2022.
The Bank of England (BoE) left its key rate steady at 3.75% on Thursday, with one vote for a rate hike.
The BoE also scrapped its usual practice of publishing a central forecast for inflation and other key economic indicators, instead producing three scenarios, the most extreme of which could require a "forceful" increase in borrowing costs.
The Fed left rates unchanged on Wednesday in an 8-4 vote, the narrowest split in decades. Three officials opposed a tilt toward easing, and one voted for a rate cut.
The Fed kept the "easing bias" in its policy statement, but outgoing Chair Jerome Powell said that a change could conceivably be made as soon as June.
Traders expect the Fed to skip rate cuts in 2026 and possibly raise rates in the first half of 2027.
The Reserve Bank of New Zealand held rates at 2.25% earlier in April. Its governor said this week that measures of core inflation were stable within its 1%-3% target band in the first quarter, though it was ready to act if needed.
Markets are pricing three hikes by the end of the year.
The Bank of Canada (BoC) held rates steady at 2.25% on Wednesday, saying higher oil prices would benefit Canada by boosting export revenues, while modestly squeezing businesses and consumers.
The BoC assumed oil prices would fall to $75 a barrel by mid‑2027, and if so, its policy rate was about right. But it said it would respond swiftly if inflation proved persistent.
Inflation rose to 2.4% in March, within the BoC's target range.
The ECB is also biding its time for now. It too left rates unchanged at 2% on Thursday but signaled its rising concerns over soaring inflation, bolstering bets it would lift rates several times this year, with an initial move likely as soon as June.
President Christine Lagarde said the final decision to hold rates was unanimous, but told a press conference a possible rate hike had been discussed "at length" by policymakers.
The Riksbank meets next week, with most economists expecting no change to the 1.75% key rate.
Swedish policymakers have also warned of the risks of higher inflation due to the war, and say they could take action if needed.
The Bank of Japan (BOJ) kept rates steady at 0.75% on Tuesday but gave unusually blunt signals of a near-term rate hike, warning extra vigilance was needed to keep inflation in check.
Three dissenters proposed a hike.
Since 2022, the BOJ has cautiously raised rates from negative territory. They remain lower than elsewhere, contributing to yen weakness, which in turn could further drive inflation.
Complicating the picture for the BOJ, Japanese government bond yields are at their highest in decades.
At 0%, the Swiss National Bank (SNB) has the lowest rates in the G-10.
The SNB is expected to leave rates steady at its June meeting and to rely on foreign exchange intervention to counter a sharp appreciation of the Swiss franc, which has been supported by investors seeking safe-haven assets.
A stronger currency lowers import prices, cushioning the inflationary impact of higher energy costs, but risks pushing inflation below the SNB's 0%-2% target range.
Consumer prices rose by 0.3% last month, compared with March 2025, the highest in 12 months.
