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Market expectations for interest rates ahead of the tariffs announcement show varying probabilities across major central banks.
For the Federal Reserve, there is a 76 basis points outlook, with an 81% likelihood of no change at the next meeting. The European Central Bank is projected to reduce rates by 63 basis points, with an 81% chance of a rate cut. The Bank of England anticipates a 53 basis points cut, supported by a 70% probability of change.
Expectations For Other Central Banks
The Bank of Canada is expected to have a 58 basis points adjustment, with a 61% probability of maintaining current rates. The Reserve Bank of Australia projects a cut of 72 basis points, with a 60% likelihood of a rate change. The Reserve Bank of New Zealand shows a 68 basis points reduction, with an 82% probability of cutting rates.
The Swiss National Bank is projected for a minor 14 basis points change, with a 74% probability of no adjustment. Meanwhile, the Bank of Japan indicates a 31 basis points outlook, with an 83% likelihood of maintaining rates.
In plain terms, what’s laid out here is a snapshot of where traders currently believe interest rates are heading, and how likely each central bank is to act in the immediate future. Every figure showing basis points reflects the movement being priced into the market—either up or down—and the attached probability tells us how confident that expectation is.
The Fed’s numbers suggest a broad expectation that no adjustment will occur in the short term, despite the market pricing in a healthy amount of total easing later. Given the 81% chance of no change, there seems little immediate pressure on shorter-dated contracts. Still, with 76 basis points implied across the curve, the medium-term bias is clearly leaning towards lower rates. Trading volumes may start to pick up only if the data veers harder in either direction. From what we’re seeing, it’s best not to fade the current range unless risk appetite is abnormally high.
Eurozone And Uk Divergences
Over in the eurozone, the ECB shows a robust push toward easing, with a market that seems mildly confident in a near-term reduction. The 81% probability of a cut lines up closely with the 63 basis point projection, suggesting markets are pricing in the first move as relatively soon, followed by incremental steps. If that expected trajectory holds its shape, there’s room for premium to decay on existing short-rate positions, unless strong inflation surprises come through.
The rate path priced in for the Bank of England shows somewhat more hesitance. The implied reduction is still over half a percentage point, though conviction is less secure, with just a 70% likelihood priced in. The UK’s economic signals have been more mixed lately, and markets are wary of overcommitting. Short sterling futures might remain twitchy in the absence of clean macro narratives, so liquidity timing becomes almost as important as directional bias here.
Canada’s policy rate outlook is less assertive. While the broader guidance is for lower rates, the current probability strongly leans towards a hold at the next meet. The market is clearly treating incoming inflation readings with heightened scrutiny—especially as consumer spending resilience continues. This creates a tighter corridor for tactical positioning, particularly for those operating in front-month and second-month contracts.
Australia and New Zealand both show high probabilities of rate cuts, but with slight differences in how deep or sudden markets expect those to be. The Reserve Bank of Australia sits close to 60% on the first move, but still prices in over 70 basis points of easing from current levels. That gives room to lean into steepeners when fresh economic output disappoints. Across the Tasman, the pricing for the RBNZ appears more direct: a clearer signal with over 80% confidence of easing, reinforcing an environment that’s much more supportive of medium-dated bearish carry structures.
The Swiss National Bank, by contrast, remains static. A mere 14 basis point change projected and three-quarters probability of doing nothing reflects perceived economic steadiness. In this scenario, the cost of holding exposure becomes the focal point, making these contracts appealing mostly to those with either long volatility views or regulatory hedging flows.
The projected stance of the Bank of Japan is even more cemented. With an 83% probability of inaction and just 31 basis points of movement in the curve, traders are not expecting any notable shifts. However, given Japan’s historic tendency for sudden communication shifts, exposure to long-dated implieds remains relatively underpriced. We’re watching timing spreads quite closely there as a result.
In these next few weeks, volatility is likely to remain sensitive to data surprises, especially inflation prints and labour market updates. Rate traders should read these probabilities as concrete guides to where short rates are being positioned across curves—but not necessarily as fixed forecasts. Where confidence is weak and pricing is heavy, even small economic surprises might lead to sharp repricing, so being early—even if not absolutely right—can still yield favourable payoffs.
