The ‘higher for longer’ policy message appeared to finally sink in for financial markets last week, amid a central bank bonanza which saw the FOMC leave policy unchanged, but indicate a more hawkish stance going forward, with tighter policy now seen in 2024. Elsewhere, the Riksbank and Norges Bank delivered the 25bp hikes markets had been expecting, while the Bank of England (BoE) and Swiss National Bank (SNB) surprised by keeping policy on hold. Unsurprisingly, the BoJ did nothing to tweak their ultra-easy stance. Looking ahead, a quieter calendar awaits this week, though as the dust settles on last week’s policy decisions, and with quarter-end flows in the mix, volatility continue to perk up.

After implying that rates have now reached their terminal level, with the deposit rate standing at a record high 4.00%, the ECB will be closely watching the September inflation release for further signs of fading price pressures, as the debate moves to the duration for which policy will need to remain restrictive.

The table can offer a guide as to ‘what’s priced in’, and quantifies expectations expressed in the tradeable interest rate or interest rate swaps markets.