The central banks of the US, the eurozone and Japan left interest rates unchanged this week, but signalled they may raise them because of inflation driven by costly energy. Canada has already raised its main rate, and the ECB is expected to raise its rate in December.

Analysts say the pause does not mean the end of tightening. Energy prices are close to their highest in months, and the war in Iran and the unresolved conflict in the Middle East keep the risk of lasting inflation alive.

The US Federal Reserve held rates on Wednesday. It wants to see more inflation data before it decides anything further, and it says inflation remains high. Markets put the chance of a rate rise in December at about 80%. Investors expect at least one, and probably two, more rises in 2027, as strong growth and steady spending leave less room for cheaper loans.

After the September rise, President Donald Trump, who has pressed many times for lower rates, accused the Fed's leadership of political bias. Fed chair Kevin Warsh rejected the claims and stressed the bank's independence.

The ECB's decision was expected: the deposit rate stayed at 2.5%. The bank has raised it twice since the war in Iran began. This time it warned that inflation risks are growing, and markets read that as a sign of more tightening to come.

The ECB is also watching the jump in the risk premium on French government debt, the extra return investors demand to hold it. Worries about France's public finances make the bank's decisions harder. Updated forecasts in December should make it easier to judge how lasting the price pressure is. Christine Lagarde steps down in February, which adds uncertainty over who will lead the bank.

On Friday the Bank of Japan held rates but slightly raised its inflation forecast. Governor Kazuo Ueda signalled a possible rise in December. Inflation in Tokyo is well above the 2% target, and one analysis says the bank is now less focused on how to reach lasting inflation than on how to stop it staying too high.

The Bank of Canada raised its rate by 25 basis points, or a quarter of a percentage point, to 2.5%. It is the first rise in more than three years. Governor Tiff Macklem said monetary policy remains slightly stimulative. The bank puts the neutral rate, where borrowing costs neither help nor hold back growth, at 2.75%. It has raised its inflation forecast for 2027 to 3.1%, from the 2% it expected in July.

The Canadian bank's decisions quickly hit household budgets. Unlike in the US, mortgages there are usually renewed every five years or more often, and variable-rate loans are common. Higher rates therefore weigh on the housing market.

The Reserve Bank of New Zealand surprised markets. After a close vote, it kept its main rate at 2.75% instead of raising it for a third time in a row. Governor Anna Breman said the chance of a rise in December is high, and markets put it at about 80%.

Egypt raised rates by 100 basis points for the first time since March 2024, after its currency fell to a record low and inflation risks grew. The deposit rate there is 20% and the lending rate 21%. Pakistan and Ukraine also raised rates. Thailand, Chile, Botswana, Malawi, Colombia and the Dominican Republic left them unchanged.

Australia, Britain, Norway and Sweden decide next week, and all are expected to tighten. The Reserve Bank of Australia meets on 3 November and has already raised rates four times this year. High inflation and comments from governor Michele Bullock support expectations of another rise.

In Britain, rates have not gone up in 2026, but markets expect a rise at the next meeting. September inflation was above forecasts, and wages are growing faster. Governor Andrew Bailey said the longer energy stays costly, the more likely a rise becomes.

Norway's central bank raised rates in May and September and did not rule out more tightening. Core inflation in September was 3%, against the bank's forecast of 2.9%. In Sweden, the chance of a rise next week is about 80%, because the economy is doing better than expected and the risk of inflation going over the target is greater.

Switzerland is an exception among developed economies. Its main rate is zero, and it is expected to stay there in the coming months. According to the minutes of the September meeting, the bank's leaders think monetary conditions are right to keep inflation within its target range. Low yields ease the pressure on the franc to rise, as investors flee to it in times of geopolitical uncertainty.