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Franklin Templeton takes a mid-year review of the monetary policy outlook for the Group of 10 central banks, as well as India, China and South Korea.

Tariffs have complicated the picture for monetary policymakers as they balance potential inflationary pressure with risks to growth, in the US and at other central banks.

However, the US Federal Reserve “is in no hurry to cut interest rates”, Franklin Templeton analysts write, as the economy “continues to remain resilient” and policymakers anticipate a pick-up in inflation from tariffs. The Swiss National Bank is also expected to continue to hold.

Meanwhile, Bank of Canada forward guidance is “indicative of a dovish hold”, which “buys policymakers more time in terms of assessing the trade-offs on inflation from the upside trade risks and the downside economic risks”. Nevertheless, Canada is expected to cut first in July, followed by the UK, Australia and New Zealand in August. 

While the European Central Bank still faces downside risks to growth and inflation in the near term, the expected fiscal loosening and geopolitical uncertainty “are calling for a tentative pause” until September. Norway and Sweden are also expected to cut in the same month.

India, South Korea and China are all expected to cut before the end of the year. Japan alone is expected to hike.