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Posted March 24, 2026 at 10:15 am
Rate futures suggest Fed and global peers stay on track for multiple hikes in 2026, even after US-Iran tensions showed signs of easing.
Rate futures are still betting 2026 brings more central-bank hikes, even after signs of easing US–Iran tensions cooled one near-term risk.
A Scotiabank snapshot of interest-rate pricing suggests investors still buy a “higher for longer” story. In the US, overnight index swaps imply markets see room for at least one 25-basis-point Fed hike by year-end. Abroad, pricing is more hawkish: Canada and Europe look set for multiple moves, with the ECB and Bank of England seen hiking around April and June and building toward roughly 75–100 bps of tightening by year-end. Asia-Pacific is similar, with Japan, Australia, and New Zealand priced for additional increases, and New Zealand’s path running ahead of its central bank’s guidance. Some emerging markets also show little easing appetite, with India priced for a near-term hike and Mexico seen holding for now.
For markets: Borrowing costs are still the main plotline.
When expected rate paths rise in multiple regions, long-duration bonds and growth stocks can face headwinds because future cash flows get discounted at higher yields. More synchronized tightening also tends to keep credit conditions restrictive, which can bite highly leveraged companies and riskier borrowers first. And diverging rate expectations can move currencies, as money often chases higher yields.
The bigger picture: Calmer geopolitics does not fix sticky inflation.
Lower geopolitical tension can reduce some energy and supply-chain worries, but central banks mostly respond to domestic inflation and wage trends. With markets still pricing springtime moves in Europe and a drawn-out hiking cycle elsewhere, investors are signaling policymakers may prioritize price stability over growth support. If that bet holds, 2026 may look less like a fast pivot and more like a longer reset to higher real interest rates.
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Originally Posted March 23, 2026 – Markets Priced In A Busy Year Of Central Bank Hikes
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