CaiTong Securities: The central banks of the US, Europe, and Japan all suspended interest rate hikes in October, but anti-inflation is still the main line of policy

The Zhitong Finance App learned that CaiTong Securities released a research report saying that in October 2026, the Federal Reserve kept the federal funds rate target range unchanged at 3.75%-4.00% as scheduled. The resolution's judgment on the economy and employment is still positive, and stabilizing inflation is still a policy priority. Furthermore, the ECB kept interest rates unchanged as scheduled. While continuing the downsizing policy, the resolution further highlighted the dual effects of energy shocks and tightening financing conditions; the Bank of Japan kept the policy interest rate at around 1.25% as scheduled, but moved forward its inflation position and greatly accelerated the pace of ETF sales, releasing a clear signal of hawkish normalization.

The main views of Caitong Securities are as follows:

The central banks of the US, Europe, and Japan both suspended interest rate hikes in October, but stabilizing inflation is still the main line of policy, and the current standstill cannot be extrapolated as weakening policy constraints.

The Federal Reserve kept interest rates unchanged at 3.75%-4.00%. Economic and employment resilience determined that resistance to inflation remained a priority. The tightening of financial and credit conditions after the September rate hike provided a window for observing policy transmission. Two hawkish negative votes indicate that there is still internal support for further tightening; at the same time, starting in 2027, the FOMC will add a special session to discuss broad monetary policy strategies within the framework of 8 regular meetings to promote a further division of labor between short-term policy decisions and long-term framework discussions.

The central banks of Europe and Japan are also sending clear hawkish signals. The ECB kept the three key interest rates and the pace of contraction unchanged. Energy price increases boosted overall inflation, but moderate core inflation and wage growth, as well as a significant rise in long-term financing costs, provided a basis for suspending action; the management committee has discussed immediate interest rate hikes. The new round of forecasts and wage data for December will be key decision points, and Lagarde's early departure in February 2027 has increased medium- to long-term observation variables. The Bank of Japan maintained the policy interest rate at around 1.25% (1 vote against raising interest rates), moved the base inflation position to “roughly meet the 2% target” and revised the core inflation forecast for the 2027 fiscal year. At the same time, it unexpectedly announced that it would drastically raise the ETF's annual book price sales volume from 330 billion yen to 860 billion yen (the static clean-up period was shortened from 112 to 43 years), continuing to evaluate the normalized direction of interest rate hikes meeting by meeting.

On the financial market side, crude oil continued to rise, gold, silver and copper fell, and aluminum prices rose; US stocks generally rebounded, Japan, South Korea, and Hang Seng Index rose while A-shares and Hong Kong technology sectors adjusted; US, Germany, and UK bond yields generally declined, US bond yield curves steeper, and Chinese bond yields rose slightly; the US dollar index rose slightly; the euro and yen weakened against the US dollar; the US credit spread widened slightly, Italy, Germany, and the US dollar, US, Germany, US, and Japan The gap narrows, the gap between China and the US narrows inversely, VIX and The MOVE index both declined.

In terms of macro data, the US overall and core PCE rebounded to 3.6% and 3.1%, respectively, in September, and core service inflation remained strong; however, actual PCE almost stagnated month-on-month, with actual disposable income falling and the savings rate falling to 3.8%. Inflation's squeeze on purchasing power was highlighted, increasing the growth costs of subsequent interest rate hikes. In terms of high-frequency indicators, the US economic accident index rebounded while GDPNow was lowered, and the Eurozone accident index declined markedly; the number of initial jobless claims remained flat and renewals declined; Red Book retail sales rebounded year on year, gasoline retail prices fell slightly, and the decline in mortgage interest rates led to a rebound in mortgage applications. Financial conditions in Europe and the US continue to tighten simultaneously.

Risk warning: statistics or omissions; economic performance may exceed expectations; market trends are uncertain