ING: Our latest views on the major central banks in World Economy News 09/03/2026 Federal Reserve After cutting the policy rate by 75bp over the final three FOMC meetings of 2025, the Federal Reserve held steady in January and signalled that it saw little need for additional near-term action given that inflation remained above target and, in its view, the downside risks to the jobs market had receded. While the US imports little energy from the Middle East, it faces higher domestic oil, gas and electricity prices following the military action against Iran. This will delay inflation returning to 2%. In terms of growth, higher prices may be a boost for the US energy sector, but higher energy costs will squeeze household spending power at a time when consumer confidence is already weak due to anxiety over tariffs and job security. An added sense of economic and geopolitical uncertainty is not going to incentivise companies to suddenly accelerate hiring either. In the near-term, the inflation narrative is likely to be the Fed’s focus, but if higher energy prices are sustained, it also poses clear challenges to growth and jobs that will ultimately lower inflation pressures in the economy. With the policy rate range of 3.5-3.75% still regarded as mildly restrictive, we continue to see scope for 50bp of cuts this year, but have pushed them back to September and December. European Central Bank With the war in the Middle East, a rate cut should definitely be off the table for the ECB’s March meeting. Gone is a scenario in which a stronger euro could push down the central bank’s own inflation forecasts for longer, leading to a more controversial debate on inflation undershooting and what it would mean for the ECB’s credibility. Oil prices had already started to increase and the start of the war in the Middle East has probably coincided with the cut-off date for the latest forecast round. The latest market movements, i.e., a weaker euro and higher oil prices, would lead to higher inflation in the eurozone going forward. The big question for the ECB is therefore no longer how to react to an inflation undershooting but rather how to react to another oil price shock. Traditionally, oil price shocks tend to be stagflationary for the eurozone, which often motivated the ECB to simply look through oil-driven inflation surges. However, the risk of such an approach is falling behind the curve, as could be witnessed in 2022. With these memories still fresh, we expect the ECB to turn more hawkish. However, as our base case scenario sees an easing of turmoil and oil prices, there is also no need for it to actually hike rates. Instead, we continue expecting the ECB to keep interest rates on hold this year. Bank of England The Bank of England has shown itself to be among the most sensitive to supply-driven rises in headline inflation. That was on full display last summer, when the Bank became more reticent to cut interest rates amid a rise in food prices. With the painful memories of the 2022 inflation overshoot still relatively fresh, higher energy prices risk delaying further interest rate cuts. That said, unlike in 2022, the jobs market is weak and getting weaker still. That limits the risk of wage growth rising in response to higher energy costs. We are retaining our call for two cuts this year, premised on the idea that oil/gas prices will recede from recent highs through the spring. We’ve pushed back our call for a March rate cut on the basis that it was