Market-implied rate hike expectations for year-end have shifted modestly dovish across nearly all major central banks following a week packed with policy decisions and key economic data releases. The coordinated shift reflects how traders are recalibrating bets on the final phase of a global tightening cycle that has unfolded over roughly the past 18 months. Below is the current market pricing for expected rate hikes by year-end:

• RBNZ: 58 bps (97% probability of a hike at the next meeting)
• ECB: 38 bps (68% probability of a hike at the next meeting)
• Fed: 34 bps (68% probability of a hike at the next meeting)
• BoE: 30 bps (72% probability of no change at the next meeting)
• BoJ: 27 bps (72% probability of no change at the next meeting)
• BoC: 16 bps (98% probability of no change at the next meeting)
• RBA: 14 bps (97% probability of no change at the next meeting)
• SNB: 9 bps (95% probability of no change at the next meeting)

Pricing for the Reserve Bank of New Zealand remained unchanged, as no significant news or data emerged from New Zealand during the week.

European Central Bank

Several ECB policymakers highlighted the absence of clear second-round inflation effects and refrained from signaling a September rate hike. This contributed to minor dovish repricing. The ECB has raised rates at every meeting for over a year, bringing its deposit rate to its highest level since 2001, and the reluctance to pre-commit to another move suggests growing confidence that the transmission of past hikes is doing its work. However, a stronger-than-expected reading in Eurozone core inflation will keep the September meeting firmly in play.

Federal Reserve

The Federal Reserve left interest rates unchanged, with three dissenters voting in favor of a hike. While the consensus anticipated that Fed's Logan and Fed's Hammack would prefer a rate increase, Fed's Kashkari also joined the dissenting camp. Given Kashkari's hawkish reputation and the roughly 30% probability of a hike that was already priced in before the decision, markets engaged in some dovish repricing, even though the broader outlook remained essentially unchanged.

Fed Chair Warsh offered no clues about the next meeting, continuing his approach of limited forward guidance. With inflation still above the Fed's 2% target but headline measures continuing to moderate, the central bank faces the delicate task of determining whether cumulative tightening has done enough. The next major event will be the US CPI report on August 12, which is likely to determine whether the Fed raises rates in September.

Bank of England

The Bank of England left the Bank Rate unchanged as widely expected, with three members dissenting in favor of a hike: Pill, Greene, and Mann. The consensus had been looking for a 7-2 vote split, but given that Mann had been the closest to shifting her vote, the outcome did not surprise the market.

The central bank maintained its non-committal tightening bias. Dovish repricing was triggered by BoE Governor Bailey, who told reporters not to leave the room thinking that the BoE was edging toward a hike. He reinforced that message by adding that policymakers were not discussing an "insurance hike." With UK rates already at their highest since 2008 and signs of softening in the labor market, the BoE appears to be weighing whether persistently elevated services inflation warrants further action or patience.

Bank of Japan

The BoJ held interest rates unchanged as widely expected, with Takata—the board's most hawkish member—dissenting in favor of a rate hike. The policy statement was largely unchanged and carried no hawkish signals. The near-term inflation forecast was revised downward, which does not point to an accelerated pace of rate increases. Unlike its global peers that spent the past two years aggressively tightening, the BoJ only recently exited its negative interest rate policy and remains in the earliest stage of policy normalization.

BoJ Governor Ueda offered no clear policy signal, though he noted that the central bank could speed up the pace of rate hikes if financial conditions become too easy. That is not currently the case, as bond yields continue to hover around cycle highs while the Nikkei index is down 13% from its all-time highs. Market pricing for the BoJ remained largely unchanged.

Bank of Canada

Pricing for the Bank of Canada saw slightly dovish repricing, despite no significant news or data from Canada during the week. The BoC was one of the first major central banks to pause its hiking cycle, having held rates steady since its most recent adjustment.

Reserve Bank of Australia

Australia's Q2 inflation report missed expectations across the board. The Trimmed Mean CPI year-over-year came in at 3.6%, below the RBA's own 3.8% estimate, giving the central bank room to keep interest rates unchanged for a longer period. The RBA has been among the most cautious central banks in the current cycle, having raised rates by less than most peers, and the softer data reinforces market expectations that its tightening cycle may have already concluded.

Swiss National Bank

Dovish repricing was also observed for the SNB following a Bloomberg report stating that the central bank was prepared to keep its key interest rate at zero until the end of 2027 before likely beginning to raise it, according to people familiar with internal thinking at the central bank.