How have interest rate expectations changed after this week’s events?

Rate hikes by year-end

RBNZ: 62 bps (82% probability of rate hike at the next meeting)Fed: 30 bps (83% probability of no change at the next meeting)ECB: 24 bps (72% probability of no change at the next meeting)BoJ: 20 bps (99% probability of no change at the next meeting)BoE: 18 bps (93% probability of no change at the next meeting)RBA: 10 bps (85% probability of no change at the next meeting)BoC: 8 bps (91% probability of no change at the next meeting)SNB: 5 bps (96% probability of no change at the next meeting)Last week’s market pricing here

We can see that we got some further dovish repricing almost across the board this week. The main culprits were oil prices falling below pre-war levels and inflation data showing further cooling in June.

The RBNZ is the only major central bank expected to hike in the summer but they might deliver a dovish hike given the quick drop in energy prices.

For the other central banks, it looks like it’s going to be a tranquil summer waiting for more data and then deciding on the next moves from September onwards.