Fed, Bank of England and Bank of Japan Rate Decisions

The Federal Reserve sets US interest rates on Wednesday, the Bank of England decides on Thursday and the Bank of Japan announces on Friday. All three meet with crude above $100 a barrel and US inflation stuck at 3.4%, which has turned the week’s question from when rates will fall to whether they will rise.

The decisions land against turbulent global bond markets and a Middle East conflict that keeps feeding energy prices into consumer prices. In a preview published on 13 September, the Guardian called it a moment of truth for central bankers in the US, Japan and the UK.

Oil past $100 rewrote the question

The strait of Hormuz remains all but closed to tanker traffic and Houthi rebels have advanced along the Red Sea coast, threatening to choke off Saudi oil supplies. That pushed the cost of a barrel of crude past $100 last week for the first time since July, according to the Guardian. Prices eased slightly on Friday on hopes of fresh talks to reopen the waterway, but stayed well above summer levels, when hostilities temporarily abated. We covered the earlier leg of that move in oil prices jumping above $90 as the US-Iran ceasefire expired.

Higher energy costs are expected to drive a fresh rise in US inflation, which has now been above the Fed’s 2% target for more than five years.

Photo: The Guardian

Will the Fed raise rates on Wednesday?

It is not settled, and that is the story. Kevin Warsh, the new Fed chair, was handpicked by Donald Trump, who has repeatedly demanded lower rates. In a Truth Social post this month Trump claimed the US should have the “LOWEST RATE of any country in the World,” adding: “The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change.”

Warsh’s own signal points the other way. In a speech this month he said that without continued progress toward the 2% target, Fed policymakers would have “work to do.” The Guardian frames Wednesday as a test of whether Warsh can face down Trump’s demands and instead persuade Fed governors to raise rates.

The Fed would not be tightening alone. The European Central Bank raised rates on Thursday, with president Christine Lagarde saying the Middle East conflict “continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.”

Bank of England: 3.75% and a “hawkish hold”

Governor Andrew Bailey has struck a calm note, arguing that rising mortgage rates have already done some of the work of a rate rise without the Bank acting. Markets and economists expect a hold at 3.75% on Thursday.

Under the surface it is tighter than that. Three of the nine members of the Monetary Policy Committee voted for a rise in July, and Friday’s stronger-than-expected growth data could amplify inflation fears. Thomas Pugh, chief economist at RSM, said the latest energy-price rise had “materially increased the chance that the MPC will eventually follow other major central banks and raise rates” — while predicting a “hawkish hold”: rates unchanged, minutes pointing at future rises.

Financial markets are now betting on four UK rate rises over the next 12 months, up from the three expected before the oil surge.

Bank of Japan: 1.25% would be a 30-year high

Tokyo decides on Friday and is widely expected to raise. A quarter-point increase would take the BoJ’s policy rate to 1.25% — levels not seen for more than 30 years, since Japan first began fighting deflation, or falling prices. A hike would validate the yen’s recent recovery on foreign exchanges.

The US Treasury joined Japanese authorities in intervening in currency markets to support the yen in July, and Treasury secretary Scott Bessent has made clear he expects rates to rise. Speaking at Southern Methodist University in Texas on Tuesday, he said: “When we intervene with the Japanese yen, I have pretty good insight into what the Bank of Japan is going to do… I have asymmetric information. I am the house now. You can bet against me if you want.”

What prediction markets add — and what they don’t

Kalshi and Polymarket have listed central bank rate-decision contracts in the past — yes/no markets on whether the Fed moves its target range, or whether the BoJ delivers a quarter point. This piece cannot confirm which listings are live for these three meetings, so check each platform’s rates board directly rather than assuming a market exists.

Where such a market is trading, the price is the crowd’s implied probability: consider a contract priced at 68 cents — an illustrative figure — meaning traders collectively assign roughly a 68% chance to that outcome. If you have never traded one, our five-minute field guide to reading Polymarket odds as probabilities covers the mechanics.

Photo: FluxrBot illustration

One trap matters this week. “Four UK rises priced over the next 12 months” is cumulative pricing across several future MPC meetings — in practice a bond-market number about the total tightening expected over a year. It is not a probability that the MPC hikes on Thursday, and the two questions get conflated constantly. The Thursday question is separate, and its answer is usually a much smaller number.

Multiplication does apply to a fixed sequence you specify yourself: a trader who judged a hike at each of four named meetings at 70% would put the chance of all four at roughly 24% (0.7 × 0.7 × 0.7 × 0.7) — illustrative figures, not market data. The conditional chain probability calculator runs that multiplication for a chain you define.

The other thing to watch is what moves prices rather than what they say now. A reopening of Hormuz would cool crude and pull rate-rise expectations down with it; a fresh escalation does the reverse. None of the three banks publishes its decision in advance, and Bessent’s boast about “asymmetric information” is a reminder that some participants know more than any price does.

Sources: The Guardian, 13 September 2026; Bank of England monetary policy; Federal Reserve.

FAQ

When do the Fed, Bank of England and Bank of Japan announce rate decisions this week?

According to the Guardian, the Federal Reserve decides on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday. The BoJ is widely expected to raise its policy rate by a quarter point to 1.25%, the highest level in more than 30 years.

Will UK interest rates rise on Thursday?

The Guardian reports markets and economists expect the MPC to hold at 3.75%, but three of its nine members voted for a rise in July. Economist Thomas Pugh predicts a ‘hawkish hold’: rates unchanged, with minutes pointing to possible future rises.

Why is inflation rising again?

Oil surged past $100 a barrel for the first time since July because the strait of Hormuz remains all but closed to tanker traffic and Houthi rebels have advanced along the Red Sea coast. Higher energy costs feed directly into consumer prices, pushing inflation up in the US, UK and elsewhere.

Does ‘four UK rate rises in 12 months’ mean a rise is likely this week?

Not directly. The Guardian’s figure describes cumulative tightening priced by financial markets over a year, across several MPC meetings. The probability of a hike at any single meeting, including Thursday’s, is a separate and usually smaller number.