Most of world major central banks kept rates unchanged but signalled readiness to tighten their monetary policies amid growing inflationary pressure

Six major central banks have already released their monetary policy decisions this week, with only Reserve Bank of Australia delivering 25 basis points rate hike.

The RBA raised interest rates by 25 basis points to 4.1% amid growing concerns about inflation, which is expected to rise to 4.2% by mid-year, according to the central bank’s projections.

In addition, the RBA policymakers signaled that they would remain on tightening path and expect interest rates to rise to 4.35% in the third quarter.

The US Federal Reserve kept its interest rates unchanged at 3.75% and showed more hawkish stance, by sidelining recent expectations for two rate cuts in 2026 and turning narrative towards further policy tightening, as surge in oil prices is expected to fuel inflation.

Bank of Canada and Swiss National Bank also opted to keep rates unchanged at 2.25% and 0.00% respectively, with bank of Japan keeping rates on hold at 0.75% and remaining focused on upside risk to inflation that signals readiness for further rate hikes in the near term, despite anticipated negative impact on economic growth from the war in the Middle East.

Finally, the Bank of England and the European Central Bank have delivered their decisions to stay on hold, with the BoE policymakers’ unanimous vote to keep rates at 3.75%, while the ECB policy rate at 2% was also unchanged.

Both central banks had similar rhetoric to the others, signaling cautious approach to the monetary policy in the near future and expressing readiness to act if inflation rises, as war continues to darken the outlook, but both central banks highlighted that they will also closely monitor economic growth before making any decision.

Overall message from major central banks will be that current situation is very fragile and it could deteriorate as war in the Middle East has so far shown only signals of further escalation.

The main task for the central banks will be to monitor the situation and act accordingly by considering inflationary risks as well as risks of slowdown in economic growth, to avoid situation to chase surging inflation, like it was during post-pandemic period.