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Global Central Banks Hold Rates Steady as Trade and Geopolitical Risks Persist

Investor repositioning in bond markets reflects uncertainty over US tariffs, inflation trends, Middle East tensions.

An eagle tops the U.S. Federal Reserve building's facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst/File Photo
A view of a building inside the Bank Indonesia complex housing the bank's headquarters in Jakarta, Indonesia December 8, 2015.REUTERS/Darren Whiteside/File Photo
A Taiwanese flag is seen on top of Taiwan's central bank in Taipei, Taiwan, December 14, 2022. REUTERS/Ann Wang/File Photo
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Overview

  • The Federal Reserve is widely expected to maintain its benchmark rate at 4.25%–4.50% at its June meeting, pausing to assess inflation pressures and tariff impacts.
  • The Bank of England’s Monetary Policy Committee is forecast to keep the UK base rate at 4.25% after April’s Consumer Prices Index unexpectedly rose to 3.5% and labour market data showed cooling wage growth and higher unemployment.
  • Taiwan’s central bank plans to hold its policy rate at 2% through early next year, while Bank Indonesia is set to leave its benchmark at 5.50%, both prioritising economic stability amid external headwinds.
  • Bond investors have reduced long-duration Treasury holdings and pushed back expectations for Fed rate cuts to September, reflecting softer price readings and fiscal policy uncertainties.
  • Ongoing US-China trade tensions and renewed Middle East hostilities are reinforcing a cautious, wait-and-see approach across major monetary authorities worldwide.