• The Federal Reserve appears to be the only major central bank leaning toward a rate cut.

• Both the Reserve Bank of Australia and the Swiss National Bank are expected to keep interest rates unchanged.

What Moved the Markets Last Week?

Europe’s latest data did little to support the more dovish voices within the European Central Bank, with the final Q3 release showing an upward revision to GDP alongside wage pressures that remain stubbornly firm conditions that argue against any shift toward looser policy. In Germany, Chancellor Friedrich Merz managed to pass his pension reform package by a razor-thin margin, preventing a coalition rupture but underscoring growing political tensions around welfare cuts and longer-term retirement changes, an unwelcome backdrop for the Eurozone. Meanwhile in the US, September’s income and spending report did little to alter expectations ahead of the upcoming Federal Open Market Committee meeting: core inflation remains persistently elevated, giving policy hawks reason to hold their ground, while softer real-spending figures offer doves only limited support—leaving the Federal Reserve on a steady course for now.

Early comments from Isabel Schnabel signalled that she is comfortable with market expectations pointing toward the next move by the European Central Bank being a rate hike. Meanwhile, upcoming German industrial data for October are unlikely to show any real improvement, as the sector continues to feel the impact of United States government tariffs. A meaningful industrial recovery still looks like a 2026 prospect—and even then, growth is expected to be restrained despite fiscal efforts.

In the UK, October GDP should register a mild bounce following September’s decline, though a cautious consumer backdrop continues to limit overall momentum.

Central banks are also in the spotlight this week. The Swiss National Bank is widely expected to keep rates at 0%, maintaining a steady stance well away from negative territory. The Reserve Bank of Australia is also positioned to leave rates unchanged at 3.6%, but recent upside surprises in employment and inflation could see Governor Michele Bullock strike a slightly firmer tone—potentially offering some support to the AUD.

In the US, the Federal Reserve is anticipated to deliver a 25-bp cut at Wednesday’s Federal Open Market Committee meeting, a move already fully priced in by markets. However, the communication could be less straightforward: possible dissenting votes and the expectation of Kevin Hassett taking over leadership leave Chair Jerome Powell in a weaker position. The dot plot is likely to remain unchanged, showing only one projected cut in 2026. With unemployment forecasts drifting higher and growth estimates improving, the overall message may still come across as hawkish.

What this means:

Analysts expect limited policy shifts this week, but communication risks are high. Europe continues to face sluggish industrial momentum, the UK recovery remains fragile, and central-bank rhetoric—particularly from Australia and the US—could shape short-term currency moves.

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