Global central banks' rate cut expectations cool across the board, surging oil prices reignite inflation concerns

BlockBeats News, March 2nd — Due to the Middle East war driving up oil prices and triggering inflation concerns, the currency market on Monday reduced bets on interest rate cuts in the US, UK, and Eurozone. The probability of the Federal Reserve cutting rates three times in 2026 has dropped from nearly 50% last week to 20%. Traders no longer expect the Bank of England to cut rates three times this year, and the probability of a rate cut in March has been lowered from over 80% to 60%. The probability of the European Central Bank cutting rates this year has halved, with only 5 basis points of rate cut priced in. The two-year yields, which are most sensitive to monetary policy changes in the US, UK, and Germany, have risen more than long-term yields. Driven by Brent crude oil prices recording the largest increase in four years, inflation indicators have jumped sharply.

Laura Cooper, Global Investment Strategist and Head of Macro Credit at Neuberger Berman, said: "The continued rise in oil prices will have significant spillover effects on the global economy and inflation trajectory. A more persistent energy pulse could complicate the disinflation process and delay further rate cuts." (Golden Ten Data)