Global Central Banks Hold Steady in May

(MENAFN) Central banks across the globe are bracing for a restrained but consequential May, as the near-total closure of the Strait of Hormuz continues to stoke energy prices and cloud the inflation outlook worldwide.

With surging energy costs forcing upward revisions to global inflation forecasts, monetary authorities are moving with deliberate caution. Six major institutions — the Reserve Bank of Australia (RBA), Sweden's Riksbank, Norway's Norges Bank, the Czech National Bank (CNB), the Reserve Bank of New Zealand (RBNZ), and Hungary's National Bank (MNB) — are all scheduled to deliver policy decisions in the weeks ahead.

Oceania: Tightening Expected
In the Asia-Pacific region, both the RBA and the RBNZ — key pillars of regional financial liquidity — are anticipated to adjust their policy settings, though in opposing directions.

The RBA is broadly expected to lift its benchmark rate by 25 basis points, bringing it to 4.35%, after Australian inflation printed at 4.6% annually in the first quarter. Though the reading fell short of projections, it signaled renewed price momentum — with housing, transportation, and food and non-alcoholic beverages recording the steepest increases. At its most recent meeting, the RBA raised rates by 25 basis points to 4.1%, in line with forecasts, while acknowledging that inflation — though down from its 2022 peak — regained traction in the latter half of last year, partly fueled by gas price spikes tied to the Middle East crisis.

Across the Tasman, money markets are pricing in a 60% probability that the RBNZ will deliver a 25-basis-point rate cut on May 27.

Europe: Caution Dominates
In Scandinavia, both Sweden and Norway face pivotal decisions. The Riksbank is widely anticipated to hold its rate at 1.75% on May 7, consistent with its March stance of keeping rates on pause as the Middle East conflict threatens to dampen near-term growth. Norges Bank is expected to follow suit, maintaining its rate at 4% on the same date, as it weighs rising inflationary pressures against deepening geopolitical uncertainty.

Further east, the CNB held its rate at 3.5% in March, even as annual inflation remained below its 2% target, at 1.9%. Markets remain divided on the bank's next move, though a case for sustained tightening is building given climbing energy costs and ripple effects from Middle East instability. Meanwhile, Hungary's MNB opted to leave its rate unchanged at 6.25% in April, citing geopolitical headwinds weighing on both global growth and inflation trajectories.

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