Central Bank Parade With Octa Broker: Markets Brace for a Week of Big Decisions

Major central banks around the globe—the Bank of Canada (BoC), the U.S. Federal Reserve (Fed), the Bank of England (BoE), and the Bank of Japan (BoJ)—will announce their latest decisions on interest rates. Since relative monetary policy significantly impacts currency rates and even leads to swift changes in currency pair prices, traders should follow these economic events.

Interest rate cuts are on the table at three meetings. The market expects the BoC, the Fed, and the BoE to decrease their interest rates. However, BoE is unlikely to follow the move during the upcoming meeting, with the majority anticipating potential monetary easing later this year. On the other side, BoJ is thought to take a hawkish path again—however, later this year. Hence, rate hold is a possible option for two central banks this week.

The Fed’s meeting, with Jerome Powell reinforcing expectations of a long-awaited rate cut, is the most anticipated one. The cut may support the U.S. economy and significantly move financial markets, given investor sentiment. To stay on top of market news and timely adjust a strategy, traders should monitor all the upcoming announcements, policy reports, and press conferences.

Bank of Canada

The Bank of Canada (BoC) will announce its interest rate decision and the Monetary Policy Report on 17 September 2025 at 09:45 ET (13:45 UTC), with accompanying commentary from the Governing Council. Previously, policymakers kept the 2.75% rate on hold, following a series of earlier hikes and pauses as inflation moderated. Like other central banks, BoC emphasises a data-dependent approach and flexibility in returning inflation toward the 2% target.

Lately, consumer prices in Canada remain well below the peaks of prior years. CPI was reported at +1.7% year-on-year in July 2025, down from June—suggesting that headline inflation has eased. However, the economy slowed markedly in Q2. The annualised GDP contracted by about 1.6% in Q2, driven by a sharp fall in exports and business investment—increasing the chances of policy easing. Another supporting factor that changed market sentiments from an anticipated rate hold to a 0.25% cut is a worse-than-expected jobs report. According to recent data, 66,000 jobs were lost in August alone, while 106,000—in the previous two months.

‘Markets initially expected the Bank of Canada to keep rates unchanged, just as it did at the last three meetings. But after the labour market shock, sentiment shifted, and markets are now pricing in a 25-basis point cut in September, bringing the policy rate to 2.5%. One move may not be enough given the trade tensions, soft labour data, and stubbornly high prices, so a follow-up cut is very much in play. That said, the option of a pause still remains on the agenda’, says Kar Yong Ang, a financial market analyst at Octa broker.

The U.S. Federal Reserve

The Fed is set to announce its interest rate decision several hours after the BoC, at 14:00 ET (18:00 UTC), 17 September. Jerome Powell’s press conference often takes place 30 minutes later. The interest rate has been at 4.25%–4.50% since December 2024, while during July’s meeting, policymakers kept the rate unchanged, citing persistent inflation and elevated economic uncertainty. The market strongly expects the upcoming meeting will bring a 25-basis point cut, relying on the updated Summary of Economic Projections and Powell’s press comments.

Jerome Powell recently emphasised that the Fed follows a data-dependent approach, with recent economic figures supporting a potential cut. The major driver is softened employment indicators, with August nonfarm payrolls rising only +22,000 and recent benchmark revisions showing substantially weaker job creation earlier in the year. On top of that, tariffs, commodity swings and geopolitical risks are adding upside price pressure and uncertainty—factors for the Fed to weigh alongside domestic slack.

‘The Fed is widely expected to deliver a 25-basis-point cut this week, as payroll growth stalls, unemployment climbs to its highest in nearly four years, and job numbers continue to be revised lower. While a handful of analysts are floating the idea of a larger 50-basis-point reduction following another weak jobs report, the balance of probabilities still favours a more measured 25-basis-point move’, says Kar Yong Ang. Indeed, a larger cut is almost ruled out of the agenda after the latest inflation data that limits the Fed’s room for aggressive easing. CPI data show headline inflation picked up to 2.9% year-on-year in August, up from 2.7% in July, while core CPI stayed at about 3.1%. Such a surprise may prompt a more cautious Fed policy and even diminish expectations for a cut.

Bank of England

The next day after the first meetings, around noon, the Bank of England will publish its Bank Rate decision, along with the Monetary Policy Summary and minutes. Similarly to the Fed cut, the market is almost certain that there will be no change to the rate after the 25 basis points cut in August, down to 4.00%. According to the minutes from that meeting, a clear committee division emerged, while the Governor, Andrew Bailey, warned from cutting ‘too quickly or by too much’—which left markets uncertain about the pace and timing of any further reductions.

‘A further reduction seems less likely amid rising inflation pressures,’ notes Kar Yong Ang. ‘The BoE expects inflation to temporarily climb to around 4% in September, driven by energy, food, and services costs, before easing back toward the 2% target. At the same time, the UK economy is losing momentum, with growth slowing in the second quarter of 2025, leaving policymakers to balance supporting activity with maintaining price stability’.

Indeed, headline CPI has surprised to the upside in recent months and remains well above target, recording the highest in 18 months data, 3.8% in July. The UK economy expands, yet at a rather mediocre pace of around +0.3% quarter-on-quarter increase in Q2. However, the recovery is uneven across sectors. Slower activity or any signs of weakening momentum can push policymakers toward easing. Such a trajectory can also be reinforced with softer labour data.

Bank of Japan

The last decision on the interest rate will be published during early hours UTC, on 19 September, when the BoJ either confirms its tightening path or signals any slowdown. Unlike other central banks that are easing their monetary policy this week, the Bank of Japan has been applying gradual tightening. Last year, it concluded its yield curve control (YCC) policy and initiated a gradual reduction of its substantial bond purchases. These actions were part of an ongoing effort to transition the Japanese economy away from a decade of significant stimulus. Furthermore, the BOJ increased short-term interest rates to 0.5% in January, based on the assessment that Japan was progressing towards sustainably achieving its 2% inflation target.

The market expects the confirmation of the chosen course and next rate hike not earlier than October, with the majority being almost certain about another rate increase before the end of 2025. ‘An anticipated September pause by the BoJ should be seen as a temporary step rather than a shift in policy direction. The combination of durable inflation and persistent wage pressures means central bankers will ultimately need to act tighter. That said, the recent upward GDP revision, pointing to stronger wage growth and household spending, gives policymakers some room to wait, making a rate hike more likely later in the year rather than this month,’ says Kar Yong Ang.

GDP in Q2 was stronger than anticipated. The economic expansion recorded a +0.5% quarter-on-quarter growth, compared to the expected +0.3%. Private consumption and net exports significantly contributed to the GDP growth. For example, private consumption increased for a fifth consecutive quarter, registering a 0.4% increase. In case the momentum persists, the BoJ gets room to consider further normalisation.

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