What are Central Banks Expected to do in 2012?

The New Year has begun and it is important to see what the market is pricing in for central banks this year. As you may know, central bank rate hike expectations change often but as of last week, most central banks are expected to keep monetary policy unchanged in the coming year but one is expected to ease aggressively. Find out who below!

Federal Reserve – No Changes in 2012

European Central Bank – Possible 25bp Cut before Year End

Bank of England – No Changes in 2012

Bank of Canada – No Changes in 2012

Reserve Bank of Australia – Aggressive Rate Cuts this Year, 25bp by March!

Reserve Bank of New Zealand – No Changes in 2012

And here are the details!


  1. A very nice piece.

    Indeed, in the midst of all the factors mentioned in the article we seem to be heading for a another perfect volatility storm.

    One thought from all this, is it possible in the midst of this storm, that the markets become so confused about which way to turn next, that in fact they don’t turn anywhere and that many key currencies will end up trading in a fairly narrow range?

  2. Macro-economic data is what will be the main driver of market sentiment this year. With the recent announcement by the Fed to keep rates stable until mid to late 2014, we saw the USDJPY retreat to its all time low. Volatility for the pair is also trended to its all time low. Hopefully we’ll start to see market fundamentals play a more dominant role in traders investment decisions in 2012 and beyond.

  3. Thanks Kathy, very informative. The RBA obviously also have the credit agencies pushing up funding rates that will be easing the way lower for the cash rate.


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