Central Banks Move Further Into the Spotlight – Currency Thoughts

Central Banks Move Further Into the Spotlight

April 29, 2026

The Federal Open Market Committee is expected to announce an unchanged federal funds target range of 3.50-3.75% at 14:00 EDT today. This is the last scheduled meeting of the Jay Powell chairmanship, although his Trump-nominated successor Kevin Warsh has not yet been confirmed by the senate. The last interest rate change was made in December. The FOMC is more split than usual because of the great uncertainty created by the war in the Middle East, which has lifted the price of energy sharply and many other goods prices that depend on energy. There’s been no formal reply to Iran’s latest proposed deal, but reportedly such is not acceptable to U.S. officials. The Strait of Hormuz remains locked down by dueling blockades. A ceasefire against full combat in the region remains in effect, but the situation in Lebanon doesn’t look like a truce.

Ceasefires and blockades may cut down on military and civilian deaths but do not stop the ticking clock measuring the rise in the the price of energy and the fast-approaching humanitarian famine that fast approaches. West Texas Intermediate crude oil has established a beachhead above $100 and was around 4% above yesterday’s closing level at 9:00 EDT.

In overnight financial markets, the dollar traded firmly, as the tone of the post-meeting press conference is expected to cast a hawkish hue. The dollar rose 0.4-0.5% overnight against the New Zealand and Australian currencies, 0.2% versus the yen, and 0.1% vis-a-vis the euro and sterling. It is very close to the YEN 160 threshold that is a presumed red line for Japanese officials, who have frequently threatened currency market intervention support for their currency. But today was Showa Day in Japan, the first of several holiday closures known as Golden Week.

Ten-year sovereign debt yields in other countries rose two basis points overnight in the United States , France and Italy and by a single basis point in Germany, Britain and Spain. The price of Bitcoin climbed 1.1%, while gold and silver fell by 0.9% and 1.1%.

Equities in Asia rebounded today by 1.7% in Hong Kong, 0.8% in South Korea and India and 0.7% in China but have thus far posted moderate losses in Europe and likewise opened in the red in the United States. At 10:30 EDT, the DOW was 0.4% lower, but the other major barometers had recovered approximately to Tuesday closing levels.

While investors await the Federal Reserve, some other central banks have been busy:

• The Central Bank of Chile late yesterday left its key interest rate unchanged at 4.50% in a unanimous vote. It’s been at that level since December since a series of cuts that began in July 2023 from a cyclical high of 11.25%. A released statement confides that “The war in the Middle East has unfolded more adversely than was foreseen in the baseline scenario of the March IPoM, increasing the probability of more negative results for global activity and inflation. The Board reaffirms that it will make every decision necessary to meet its objective of ensuring that projected inflation stands at 3% over a two-year horizon.”
• The Bank of Thailand‘s policy interest was kept at 1.0%, its level since a 25-basis point reduction in February and likewise by a unanimous vote. In a statement that calls the current stance appropriate, officials note “while inflation is assessed to increase temporarily from supply-side factors, uncertainties remain elevated” because of the Middle Eastern war.
• In Uzbekistan where inflation still exceeds 7.0%, the central bank interest rate of 14.0% since a 50-basis point hike in March 2025 will remain at the level going forward.
• Officials at the Bank of Canada began a cycle of interest rate cuts in June 2024 from a high before of 5.0%. The most recent cuts last September and October, each by 25 basis points, took the overnight rate down to its current level of 2.25%, which was not changed at today’s review. Uncertainty had already become high due to the U.S. erratic tariff rulings, and now officials must content also with the effects of the Middle Eastern war. CPI inflation jumped to 2.4% last month from 1.8% in March. Today’s statement says, “We are closely monitoring the impact of the conflict in the Middle East and how the economy is responding to US tariffs and trade policy uncertainty. Governing Council is looking through the war’s immediate impact on inflation but will not let higher energy prices become persistent inflation. As the outlook evolves, we stand ready to respond as needed. The Bank is committed to maintaining Canadians’ confidence in price stability through this period of global upheaval.”

With the end of April, a slew of economic data around the world are getting released today and tomorrow. One highlight today was Euroland’s monthly economic sentiment index, which dived 3.2 points to a 65-month low of 93.0, led by a 60-month low in services to a reading of 0.9 versus 4.1 in March  and a 15-month high of +6.2 in January.

Sweden and Belgium reported first quarter GDP figures. Swedish GDP, down 0.2% on quarter and up just 1.6% on year, was weaker than analyst forecasts. Belgian GDP rose 0.2% on quarter post posted the smallest year-on-year increase (0.8%) in 20 quarters.

Australian consumer price inflation accelerated nearly a full percentage point to an 8-month high of 4.6% in March.

On the other hand, Spanish CPI inflation dropped unexpectedly to 3.2% this month from 3.4% in March.

German CPI inflation climbed to a 27-month high of 2.9% this month, having been as low as 1.6% in September 2024. Excluding food and energy, however, inflation eased further to a 58-month low of 2.3%. The energy component was 10.1% higher than in April 2025.

Italian consumer confidence sagged to a 37-month low in April, while business sentiment in manufacturing dropped to a 7-month low.

U.S. housing starts jumped 10.8% in March to a 15-month high, but building permits fell 10.8% to a 7-month low. Reflecting the manic development of AI, non-defense capital goods orders (other than for aircraft) jumped 3.3% last month on top of a 1.6% increase in February, and their first quarter average exceeded the year-earlier level by 6.7%.

Copyright 2026, Larry Greenberg. All rights reserved.

Tags: Bank of Canada, Bank of Chile, Bank of Thailand, Central Bank of Uzbekistan, Euroland economic sentiment, German CPI

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on Wednesday, April 29th, 2026 at 7:38 am and is filed under New Overnight Developments Abroad – Daily Update.
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