Some economists now predict the European Central Bank will likely maintain its 2.00% deposit rate through 2025 and 2026, as inflation remains under control, though a small rate cut is possible. Bloomberg Economics notes that while hawkish views currently dominate, trade uncertainties, potential U.S. tariffs, and signs of economic weakness could shift ECB policy toward a rate cut, with timing being the main uncertainty. Recent German consumer confidence data shows slight improvement (-22.3 vs. forecast -23.3), driven by rising income expectations, but ongoing concerns about jobs and inflation keep sentiment fragile, impacting the broader eurozone outlook. Upcoming ECB data suggests inflation expectations are stabilizing near the 2% target, with 1-year CPI at 2.50% and 3-year at 2.40%, reflecting effective monetary policy and easing inflation pressures.

Tokyo’s September CPI held steady at 2.5% year-on-year, below the expected 2.8%, with core inflation measures also at 2.5%, down from 3.0% previously, signaling a slowdown in inflationary pressure. Despite inflation remaining above the Bank of Japan’s 2% target, the softening data reduces expectations for immediate rate hikes, though a 25 basis point increase by year-end remains possible. Japan’s 40-year bond auction saw strong demand, lowering yields to 3.31%, reflecting market stability amid political transitions and reduced volatility. The BOJ’s next moves may hinge on global economic trends, particularly U.S. jobs data, which could influence USDJPY, currently testing but struggling to break the 150 level.

Australia’s job vacancies fell by 2.7% quarter-on-quarter, a sharp contrast to the previous 2.8% rise, signaling a cooling labor market. August data showed a net loss of 5,400 jobs, with full-time jobs dropping significantly while part-time roles increased. Despite this, the Reserve Bank of Australia views the labor market as near full employment and is likely to maintain a cautious approach, balancing employment support with inflation, which is now at 3.6% within the target range. Economists predict limited rate cuts, possibly 50 basis points, but the upcoming RBA meeting will be key for hints on faster monetary easing.