ING (Dutch International Group) analysts have conducted the latest in-depth analysis and predictions on the possible dynamics of the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan in the coming months, as follows:

Federal Reserve: Multi sided Balancing of Policy Direction

Shortly after the end of the US election, the market realized that a series of pro growth tax cuts and deregulation measures, combined with potentially inflationary tariff policies and immigration control measures, greatly compressed the Federal Reserve's (Fed) room for interest rate cuts. The recent poor performance of economic data has made various sectors more concerned about the potential negative impact of President Trump's policies. There are concerns that the government's aggressive fiscal austerity policies will have a negative impact on overall economic activity, and a significant increase in tariffs will also weaken the consumption power of low - and middle-income households. In this situation, the market is starting to re-examine the necessity of the Federal Reserve providing further policy support. Despite concerns about a decrease in government related jobs, the current unemployment rate in the United States is low and inflation levels remain high.

Based on this, ING analysts believe that the likelihood of the Federal Reserve cutting interest rates before the end of summer is low. However, considering the changing economic situation, there is a high possibility of implementing interest rate cuts in September and December. It is expected that a third interest rate cut will be implemented in March next year, especially when real estate related inflation indicators perform well and can offset some of the inflationary pressure caused by tariffs. After this series of operations, the policy rate will remain in the range of 3.5-3.75%, still significantly higher than the Fed's long-term forecast of 3%.

European Central Bank: The End Game of Interest Rate Reduction Cycle

The European Central Bank (ECB) is facing intense discussions on monetary policy adjustments. On the eve of the March meeting, official statements indicate that the debate over when to end the current interest rate cut cycle is becoming increasingly intense. The well-known dovish camp continues to call for lowering the policy interest rate to 2% in the summer; And hawkish views have resurfaced, questioning whether it is necessary to lower interest rates below 2.5%.

Despite internal disagreements, a 25 basis point rate cut at the March meeting is highly likely to become a reality. At that time, the policy interest rate will be at a higher position in the neutral interest rate range. The current Eurozone is facing the dilemma of high inflation but weak economic growth, and the European Central Bank needs to find a difficult balance between stabilizing prices and supporting economic growth.

ING analysts pointed out that given the European Central Bank's own optimistic growth forecast, if the eurozone economy performs weaker than expected, it is expected that the ECB will lower interest rates to at least 2% this summer.

Bank of England: Prudent consideration of the pace of interest rate cuts

After the Bank of England implemented a rate cut in February, the subsequent policy path has attracted much attention. ING analysis suggests that the strategy with the least resistance is to cut interest rates quarterly for the remainder of this year. Although Catherine Mann, who was once hawkish in the committee, has begun to support more early rate cuts, most members do not agree with this view. In fact, the Bank of England is cautious about the recent rise in energy prices and the overall inflation rate exceeding 3% this year. At the same time, the job market is under significant pressure, and it is expected that service sector inflation will fall back to levels lower than the Bank of England's recent forecast in the spring. This may prompt the Bank of England to be more inclined to lower interest rates to nearly 3%, which is lower than the current market pricing.

Bank of Japan: cautious move forward after interest rate hike

After the Bank of Japan raised interest rates in January, it is highly likely that the policy will remain unchanged at its March meeting in order to observe the effects of previous rate hikes, while closely monitoring the dynamic changes in factors such as inflation, wage growth, and US tariff policies. In view of the recent sharp fluctuations in the foreign exchange market and the Japanese treasury bond bond market, the Bank of Japan will be particularly cautious in transmitting the timing signal of future interest rate increases.

ING analysts predict that the Bank of Japan may raise interest rates by 25 basis points as early as May, and will flexibly adjust the purchase of Japanese treasury bond to cope with sudden fluctuations in the treasury bond market. The spring wage negotiations will become a key factor in determining the timing of the Bank of Japan's next interest rate hike, while Trump's tariff policy and its impact on the Japanese economy remain the main source of risk.