Central Bank Insights: Federal Reserve, Bank of England, and Bank of Japan

Central Banks Signal Caution as Rates Near Neutral

In the last two weeks, major central banks—including the Federal Reserve, Bank of England, and Bank of Japan—have each made policy announcements that reveal a shared trend: interest rates are edging closer to neutral territory, yet policymakers remain wary of declaring inflation under control.

The Federal Reserve has halted its recent series of rate reductions, indicating that monetary policy is now nearly neutral. However, officials have left the door open to further easing if inflation continues to decline. Meanwhile, the Bank of England finds itself at a crossroads, as a tight 5–4 vote to maintain current rates highlights increasing divisions among its members.