The latest minutes from the U.S. Federal Reserve meetings and decisions by central banks in Indonesia and New Zealand indicate growing caution among policymakers. Although financial markets had hoped for a rapid easing of monetary policy, officials signal the need to maintain restrictive rates. The main reasons are persistent inflation and better-than-expected labor market conditions, forcing bankers to revise their previous forecasts for 2026.

Hawkish Signals from the Fed

Minutes from the January meeting indicate that the Fed intends to keep rates at 3.5-3.75% for a longer time due to fears of persistent inflation.

Indonesia Defends Its Currency

Bank Indonesia kept interest rates at 4.75% to curb the depreciation of the rupiah against the U.S. dollar.

Costs of the Digital Euro

The European Central Bank estimates that implementing the digital euro will cost commercial banks up to 6 billion euros over the next 4 years.

Forecasts for Japan

Economists predict that the Bank of Japan will raise rates to 1% by June 2026, which will affect global bond markets.

Analysis of the latest minutes from the Federal Open Market Committee (FOMC) meeting reveals deep divisions among U.S. central bankers. The documents from January 2026 indicate that policymakers are in no hurry to cut the cost of money, and some even allow for a scenario of rate hikes if price dynamics do not slow down. Stephen Miran, one of the Fed governors, publicly admitted that he revised his expectations regarding the scale of policy easing this year. He cited the surprisingly strong labor market in the United States, which could generate additional inflationary pressure. The Federal Reserve System, established in 1913, serves as the central bank of the USA. Its main tasks are maintaining price stability and maximizing employment, which it achieves by shaping interest rates.The situation in Asia and Oceania confirms the global trend of waiting. Bank Indonesia left rates at 4.75%, fighting to stabilize the rupiah, which is under pressure from a strong dollar. Meanwhile, the Bank of Japan is preparing for a hawkish turn – analysts predict a rate increase to 1.0% by the end of June, which would be a historic move after decades of zero-rate policy. In New Zealand, Karen Silk of the RBNZ warned that the next move could be upward, despite signals of slowing inflation. These coordinated signals from different continents suggest that the global rate-cutting cycle will be postponed to the second half of the year or even next year. USA (Fed): 3.75, Indonesia (BI): 4.75, New Zealand (RBNZ): 2.25, Japan (BOJ): 0.25 An interesting thread is also the cost of digital currency transformation in Europe. The European Central Bank estimates that the introduction of the digital euro will burden the banking sector with an amount of 4 to 6 billion euros over four years. Piero Cipollone, a member of the ECB Executive Board, emphasized that the infrastructure on the central bank side alone will consume about 1.3 billion euros. Meanwhile, in the United Kingdom, the British pound hit its lowest level in a month, reaching a rate of 1.3483 USD, reflecting market uncertainty about further moves by the Bank of England. „The labor market has turned out slightly better than I expected over the past few months.” — Stephen Miran4-6 bn — euros will be the cost of implementing the digital euro for banksLiberal media emphasize the risk to economic growth from maintaining high rates and the costs of digital transformation. | Conservative media focus on the necessity of fighting inflation and defending the purchasing power of money through restrictive policy.

Mentioned People

  • Stephen Miran — Federal Reserve Governor who scaled back expectations for rate cuts.
  • Piero Cipollone — Member of the Executive Board of the European Central Bank responsible for the digital euro project.
  • Karen Silk — Deputy Governor of the Reserve Bank of New Zealand (RBNZ).