Light at the end of the tunnel: The worldwide rate-hike cycle end is nearing.

As major central banks near the conclusion of their rate-hike cycles, they are beginning to surprise the markets as their expectations for when and how they will halt monetary tightening differ.

The Fed of the United States eliminated expectations for a lengthy pause, while Switzerland unexpectedly held rates stable on Thursday and the Bank of England decided to do the same as recent data point to diminishing inflation pressures.

Below is a breakdown of what has happened over the last couple of days.

In order to control inflation, the U.S. Federal Reserve stated on Wednesday that interest rates may increase once more in the current year.

Markets are not as confident, with futures pricing a probability of another quarter-point increase by year's end of about 50%. Even if the Fed continues to be hawkish for the time being, many analysts believe the rate hike cycle is done.

Over in the UK, in spite of mounting evidence that the economy is weakening, the Bank of England kept interest rates at 5.25% on Thursday and left the door open to additional increases.

Sterling dropped significantly following the announcement, and interest rate futures data revealed that traders now estimate there is a 70% likelihood that the BoE would maintain current interest rates in November, up from a 50/50 possibility previously.

Across to the East, on September 14th, the ECB increased its key rate to 4%, the highest level since the introduction of the euro in 1999, but it also hinted that this could be the last action in a battle against inflation that has lasted more than a year.

According to economists surveyed by Reuters, the ECB has finished raising interest rates and will remain on hold at least until July 2024.

Rest of the world:

• In May, the Reserve Bank of New Zealand increased the cash rate to a record-high 5.5% and has held it there ever since. The RBNZ, a leader in the withdrawal of pandemic period stimulus, has delayed when it plans to start lowering borrowing prices until 2025.

• Tiff Macklem, governor of the Bank of Canada, stated on September 7th that monetary policy might not be tight enough to go back to target. His pessimistic comments come a day after the Bank of Canada stated it would keep its benchmark interest rate at 5% but would increase it again if pricing pressures persisted. For 27 months, inflation has exceeded the bank's 2% objective.

• Despite inflation staying inside its goal range of 0% to 2% for three consecutive months, the Swiss National Bank unexpectedly decided to maintain interest rates steady at 1.75% on Thursday. Yet SNB Thomas Jordan does not rule out a subsequent interest rate rise. If more tightening of our monetary policy is required to maintain inflation below 2% on a sustained basis, we won't hesitate to do so, he added.

• The Reserve Bank of Australia kept interest rates unchanged at 4.1% for a third straight meeting in September, the final one with outgoing Governor Philip Lowe, despite considering a 25bp raise, according to meeting minutes. On October 3rd, Michele Bullock is anticipated to use a similar tone, with markets anticipating one more rate increase before the start of 2024.

• BoJ, the most dovish major central bank in the world, will announce its most recent decision on Friday. Although Governor Kazuo Ueda stated in an interview that the central bank's negative interest rate policy would cease this year, the general agreement is that nothing should change. According to the majority of economists surveyed by Reuters on Thursday, the BoJ will abandon its negative interest rate policy in 2019.

(Sources: investing.com, reuters.com, cnbc.com)