JPMorgan on Central Banks This Week - FJElite

The Fed is staying on hold, in line with OIS pricing. After the recent improvements in incoming labour market data, we expect the Fed will remove its implicit easing bias both from the statement and from the previous 2026 median dot. which indicated one ease this year. This will be the first Fed meeting with Warsh as Chair. We do not expect a substantial regime change in his communication and we think he has to build some credibility so he shouldn’t be dovish during the conference. We continue to see the next Fed hike in Sep 2027 against market pricing of earlier and more hikes (17bp hikes cumulatively priced by Dec26 and around 30bp by mid-27).

The BoJ will deliver a widely anticipated hike. Beyond June, we will continue to call for the next BoJ hike in October (pricing around 40bp hikes) and two additional hikes next year. The pricing for BoJ terminal rate is broadly aligned with our call (2Yx1Y OIS around 2%). The BOJ faces a high bar to be seen as hawkish, starting with Uchida running the press conference

The BoE to also keep rates on hold at 3.75%, in line with market pricing, with a 7-2 vote and Pill and Greene likely to dissent for a 25bp rate hike (or possibly three dissents). We don’t expect the statement to substantially change, while the individual members' paragraphs may be more useful in gauging views on the indirect impact of the energy price increases. We continue to call for a 25bp BoE hike in July with around 50bp of gradual easing over 2027.