How have interest rate expectations changed after this week's events?NewsGiuseppe Dellamotta28/08/2026 | 11:00 GMTTagsmarket overviewAdd as a preferredsource on GoogleMarket's pricing remained largely unchanged for most central banks, except the RBA and BoCRate hikes by year-endRBNZ: 55 bps (99% probability of rate hike at the next meeting)ECB: 41 bps (98% probability of rate hike at the next meeting)BoJ: 37 bps (67% probability of rate hike at the next meeting)RBA: 27 bps (51% probability of rate hike at the next meeting)BoE: 26 bps (84% probability of no change at the next meeting)Fed: 26 bps (65% probability of no change at the next meeting)BoC: 13 bps (98% probability of no change at the next meeting)SNB: 5 bps (97% probability of no change at the next meeting)Last week's market pricing hereBy looking at last week's pricing, we can see that market's expectations remained largely unchanged for most central banks, except the RBA and the BoC. On the RBA side, the culprit for the hawkish repricing was the Australia's monthly CPI report released on Wednesday.
The Trimmed Mean CPI Y/Y came in at 3.6%, higher than the expected 3.5% increase.
More notably, the monthly measure showed a 0.5% growth, well above analysts' forecast of 0.3%.
On the BoC front, we got a dovish repricing after US-Canada trade talks collapsed and the 50% tariffs on $27.6 billion of Canadian goods went through. Canada then responded with retaliatory 'dollar-for-dollar' tariffs on US goods.
The Bank of Canada previously warned that a trade war would have a negative effect on economic growth and would warrant a less hawkish stance.Today, the main event will be Fed Chair Warsh's speech at the Jackson Hole Symposium. After the Treasury buyback announcement and Bessent’s “verbal” intervention to suppress long-term yields, I think the only thing traders will be focused on is whether he leans against the recent easing in financial conditions.
If he doesn’t, the current "debasement" trades like long precious metals, bitcoin and short US dollar will likely extend further. On the other hand, if he pushes back saying things like "recent easing in financial conditions, if sustained, could complicate the process of returning inflation to our target" or "if recent easing threatens progress toward price stability, we will not hesitate to respond appropriately" and so on, the market may retighten financial conditions and extend the pullbacks in the "debasement" trades.He is due to speak at 14:00 GMT/10:00 ET.
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