Webinar: Central banks, inflation, and the rate hike gamble
The desk views increasing pressure on major central banks as likely to spark a series of interest rate hikes, particularly reflecting on the upcoming Federal Reserve, ECB, BoE, and BoJ meetings in September. Per the full note , ING points out that despite inflationary concerns, the economic indicators that typically lead to a rate hike remain unconvincing, suggesting that the Fed is positioning itself for tightening without clear backing from data. As central banks grapple with rising yields and debt sustainability, this context will likely culminate in noticeable movements in the FX markets, particularly around currencies sensitive to these policy shifts.
What the desk is arguing
The desk frames this as a crucial point for global FX markets, with major central banks signaling a readiness to act on interest rates despite divergent economic signals. As noted by ING, the meeting insights set for September may significantly influence currency pairs as traders assess monetary policy outcomes against the backdrop of inflation fears.
ING's commentary highlighted that the Fed's impending policy decision appears to lean toward a rate hike, although many economic data points do not seem sufficiently supportive of this action, creating an environment of heightened market uncertainty.
Conversely, there’s a suggestion that the ECB's anticipated September hike could serve as a terminal move in their tightening cycle, which may have repercussions for the Euro and its relative strength against the dollar, particularly if the Fed proceeds with its hike devotionally but limits further actions thereafter.
Where it sits in our coverage
Our consensus target for EUR/USD currently stands at 1.075, with a range from 1.04 to 1.12 as outlined in our per-firm assessments. Firms in the market such as jpmorgan posit a target of 1.10 for March 2026, while bofa forecast a lower estimate of 1.04 for the same tenor.
This perspective aligns with the broader sentiment among traders anticipating a rate increase, placing us closer to the upper bound of the identified spread, indicative of the market's expectation of further volatility and potential shifts in valuation towards the end of the year.
How other firms see it
Several firms are aligned with the view that rate hikes by the Fed will lead to upward pressure on the USD, including jpmorgan and citi, emphasizing a tightening trend. Conversely, bofa presents a contrary stance, suggesting the Fed may be cautious in their approach, advocating lower targets.
Market watchers should consider how EUR/USD mirrors these anticipated movements tied to ECB's decisions, as any shifts will impact trader strategies significantly, especially around Fed communications leading into the rate hike announcements.
What the calendar says
As there are no immediate high-impact events scheduled, market attention will remain squarely focused on the ongoing discourse surrounding central bank meetings in September and any data releases that could influence rate hike expectations ahead of these critical central bank assessments.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Major central banks are moving closer to rate hikes as inflation concerns grow.
- 02Fed's decision-making is potentially at odds with current economic data.
- 03ECB's September hike may be its last in a tightening cycle.
- 04Market positioning will be critical as traders anticipate policy shifts.
Market implications
Traders should monitor levels around 1.075 in the EUR/USD pair as key resistance or support, reflective of market sentiment following central bank communications. Upcoming discussions around Federal Reserve policy could yield significant insights, potentially leading to swift positioning adjustments ahead of the September meetings.
Risks to this view
A significant downside risk would be an unexpected downturn in inflation data or signs of economic weakness that might lead the Fed to pause or reverse tightening plans, drastically impacting dollar strength and related currency pairs.
Articles Webinar: Central banks, inflation, and the rate hike gamble Published 09:00 Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Join ING's economists and strategists for a live webinar on 9 September to discuss the September round of Federal Reserve, European Central Bank, Bank of England and Bank of Japan meetings. Sign up here Carsten Brzeski , James Knightley , James Smith , Chris Turner and Rebecca Byrne The world’s major central banks are edging closer to further rate hikes this month as the economic outlook improves and inflation concerns prevail. That comes at a particularly perilous time for the global bond market, as monetary policy combines with debt sustainability concerns to push yields ever higher.
Join ING’s economists and strategists for a live webinar as they look ahead to the September round of Federal Reserve, European Central Bank, Bank of England and Bank of Japan meetings. You’ll learn: Why the Fed is edging towards a rate hike this month – and why the data doesn’t necessarily back it up How the ECB’s September rate hike could be the last Why the bar remains high for a Bank of England rate hike – and why rate cuts are still likely in 2027 Whether the Bank of Japan will pick up the pace of monetary tightening this month The impact on FX and the outlook for major currency pairs Details Date: Wednesday 9 September Time: 1430 BST/1530 CEST/0930 ET The webinar will last 45 minutes, including a Q&A session at the end. The event will take place online and the waiting room will open 60 minutes ahead of the scheduled start time.
A joining link will be emailed following registration and you will receive a reminder email 10 minutes before the scheduled start time. Webinar Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Carsten Brzeski Global Head of Macro Carsten Brzeski is the Global Head of Macro for ING Research. Previously, he worked at ABN Amro, the Dutch Ministry of Finance and the European Commission. He is a 2019 JFK Memorial Policy Fellow… James Knightley Chief International Economist, US James Knightley is the Chief International Economist in New York.
He joined the firm in 1998 in London and has been covering G7 and Western European economies. He studied economics at Durham… James Smith Developed Markets Economist, UK James is a developed market economist, responsible for ING's view on the UK economy and Bank of England. He graduated from the University of Bath with a degree in economics and joined ING in 2015.
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