"Five Central Banks Decide in 72 Hours: The Fed's December Hike Is the Real Question"

Next week is the busiest central banking week of the year, and it is compressed into three days. On Wednesday, October 28, the Reserve Bank of New Zealand and the Bank of Canada decide first; the Federal Reserve follows the same day. On Thursday, the European Central Bank decides. On Friday, the Bank of Japan closes the week. Five central banks, 72 hours, and every one of them is wrestling with the same problem: inflation that will not come back down to target while growth stays strong enough to argue against patience.

The pattern itself is the story. Several banks that were cutting rates in 2025 have turned back to hikes in 2026. The Fed raised 25 basis points unanimously in September to 3.75%–4.00%. The ECB and the Bank of Japan both hiked in September as well. September inflation prints explain the turn: US CPI at 3.7%, euro-area HICP at 3.8% — its highest since September 2023 — and even Japan's core CPI at 2.1%, above its target. The world's major central banks are tightening again, together, into a moment when credit markets are already anxious about AI spending and French government debt. That combination — hikes plus fragility — is what makes this week more than a calendar event.

The Fed's October decision is the least interesting part, precisely because it is so well priced. In a Reuters poll of 100 economists conducted October 16–20, 94 expected a hold at the October 27–28 meeting, and all 100 expected a hike in December — a sharp reversal from last month, when fewer than half expected another move this year. Chair Kevin Warsh has made clear he is not keen on giving guidance, and officials have recently signaled a slower, more deliberate path even as inflation argues for a tougher response. Longer-dated Treasury yields surged to multi-decade highs on October 7 before retreating as the odds of an October hike slipped away. October, in other words, is a pause the market has already digested. The real question is December.

The other banks sharpen the picture. The ECB is expected to hold on October 29 — 70 of 73 economists polled by Reuters — with December in focus, but it faces a constraint the Fed does not: French 10-year yields above 5% for the first time since 2002, and a debt risk premium at its highest since the eurozone sovereign debt crisis of 2011. Hiking into that is awkward. The Bank of Japan is expected to hold on October 30 while raising its inflation forecast, after Deputy Governor Ryozo Himino signaled readiness to raise borrowing costs; the US–Japan rate gap, at 262.5 basis points, remains the widest in the group, one reason the dollar sits near 157 yen. New Zealand and Canada, by contrast, are expected to hike next week. The divergence is real but the direction is shared: almost nobody is cutting anymore.

My judgment is that the Fed will hike 25 basis points at its December 8–9 meeting. The reasoning is the data, not the poll: inflation at 3.7% against a 2% target, a strong economy, and a Fed that has already resumed hiking unanimously in September. The poll's unanimity is corroboration, not the argument — 100 economists can be wrong together, and they have been before. The honest uncertainty runs the other way: this is a Fed that chose patience in October despite hot inflation, led by a chair who avoids guidance, and a lot can intervene before December — a soft data run, a flare-up in French debt or credit spreads, or simply the institutional habit of waiting one meeting too long. But a central bank that has resumed hiking, facing inflation nearly double its target, rarely stops after one move. December is when that logic gets tested.