ABE Weekly: Central Bank Countdown – Seven Rate Decisions Over the Next Fortnight

Market Insights

• Central Bank Countdown: Seven Rate Decisions Over the Next Fortnight
• US Producer Inflation Surges, Adding to Fed Rate Pressures
• China retail sales and consumer sentiment
• Germany: Producer Inflation Surges on Higher Energy Costs
• Australian Business Activity Weakens Sharply in October

Central Bank Countdown: Seven Rate Decisions Over the Next Fortnight

Key Points

• Australia: The RBA increased cash rates by 0.25% to 4.60% p.a. at its September meeting – its 4th increase in 2026! August CPI increased to 4.0% p.a., while Trimmed Mean was unchanged at 3.60% p.a.
• United States: The Federal Reserve raised the federal funds target range by 25bp to 3.75%–4.00% p.a. at its September 2026 meeting, its first rate hike since July 2023. The latest U.S. CPI inflation rate accelerated to 3.7% p.a. in September 2026, while core CPI increased to 2.6% p.a.
• United Kingdom: The Bank of England held Bank Rate unchanged at 3.75% p.a. at its September 2026 meeting. Headline CPI rose to 3.5% p.a. in September, while core CPI increased to 2.8% p.a.
• Eurozone: The European Central Bank increased its key deposit facility rate by 25bp to 2.50% p.a. at its September 2026 meeting. Euro area headline CPI rose to 3.8% p.a. in September, while core inflation rose to 2.5% p.a.

Here are the latest monetary-policy and inflation figures for key economies:

Central Bank Countdown: Seven Rate Decisions Over the Next Fortnight

Seven major central bank decisions over the next two weeks could set the direction for global currencies, bonds and equity markets heading into year-end. Global financial markets enter a pivotal fortnight as seven major central banks prepare to announce monetary policy decisions amid persistent inflation, elevated energy prices and increasingly divergent economic conditions. Between 28 October and 5 November, policymakers in the United States, Canada, New Zealand, the Eurozone, Japan, Australia and the United Kingdom will deliver interest rate decisions that could significantly influence financial markets heading into the final months of 2026. While markets broadly expect the US Federal Reserve, European Central Bank and Bank of Japan to leave interest rates unchanged, expectations of further tightening in Canada, New Zealand and Australia highlight an increasingly fragmented global monetary-policy outlook. The central question facing policymakers is whether inflationary pressures, particularly those linked to elevated energy prices, will prove temporary or require additional monetary tightening.

A Busy Central Bank Calendar

The following seven major monetary policy announcements are scheduled over the coming fortnight.

---

US Producer Inflation Surges, Adding to Fed Rate Pressures

US producer prices rose sharply in September, reinforcing concerns about persistent inflation and the prospect of higher interest rates for longer. The Producer Price Index (PPI) increased 1.3% month-on-month, accelerating from 0.5% in August and significantly exceeding market expectations of 0.6%. Annual producer inflation climbed to 6.3%, its highest level since December 2022. Importantly, underlying inflation pressures also strengthened. Core PPI, excluding food and energy, rose 0.7% compared with 0.2% previously, while the measure excluding food, energy and trade services accelerated to 0.5% from 0.3%. The broad-based increase raises concerns that producer price pressures could feed through to consumer inflation, potentially pushing the Federal Reserve’s preferred core PCE inflation measure higher in the coming months. The latest figures highlight the ongoing challenge facing the Fed: containing inflation without triggering a more pronounced economic slowdown.

---

China retail sales and consumer sentiment

While annual retail sales growth accelerated from 0.4% in August to 1.1% in September, cumulative growth over January to September remained at just 1.1%, around a quarter of the 4.5% pace recorded a year earlier. Automobiles, construction materials and jewellery have been notable drags, while weakness across much of the broader retail sector points to a lack of consumer momentum. Subdued consumption appears to reflect persistently weak sentiment, uncertainty around employment and deteriorating household wealth, rather than cash constraints alone. The property market remains central to this outlook. New and existing home prices continued to decline in September, extending a prolonged downturn that is weighing on household confidence and perceived wealth. Meanwhile, real estate development investment fell 20.6% year-on-year over the first nine months of 2026, while new home sales also remained weak. Together, these trends suggest that persistent property market weakness and subdued domestic demand continue to constrain China’s consumption recovery.

---

Germany: Producer Inflation Surges on Higher Energy Costs

German producer price inflation accelerated sharply in September, rising 6.7% year-on-year, up from 4.6% in August and above market expectations of 6.2%. This was the strongest annual increase since March 2023, while prices rose 1.9% month-on-month. The surge was driven primarily by energy prices, which increased 14.9% year-on-year, while intermediate goods prices rose 6.4%. Importantly, producer prices still increased 3.2% annually excluding energy, suggesting cost pressures extend beyond the energy sector. The data raise concerns that higher input costs could feed through to consumer prices, adding to inflationary pressures across the eurozone. While the pass-through is neither immediate nor guaranteed, persistent energy and input cost increases could complicate the European Central Bank’s policy outlook, particularly if consumer inflation begins to reaccelerate.

---

Australian Business Activity Weakens Sharply in October

The composite Purchasing Managers’ Index (PMI) fell sharply to 47.7 in October from 51.3 in September, moving back into contractionary territory and well below Q3’s average of 52.4. If the October reading persists through November and December, the decline would be consistent with real domestic final demand growth slowing to around 1% annualised in Q4, down from a potential 3.2% pace in Q3. Nominal final demand growth could also moderate to around 2% year-on-year, compared with approximately 3% in Q3. The figures point to a loss of economic momentum entering the final quarter. However, the implied growth rates are estimates based on the PMI trend, rather than direct measurements of economic output.

---