The Hawkish Turn: G10 Central Bank Policy Outlook into Q4 2026

The RBA’s hike and a Fed back in tightening mode frame the run into Q4. Our Global Macro Sentiment Indices (GMSI) show how the G10 policy debate has turned, and where it is still building.

The Reserve Bank of Australia lifted the cash rate by 25bp to 4.60% on 29 September, a unanimous decision that takes it to its highest level since October 2011 and marks its fourth hike this year. The Board noted that global energy prices are now “much higher than had been assumed” in its August forecasts, and it will do what is necessary, “including increasing the cash rate target further if needed”.

The RBA is not moving in isolation. The Fed resumed tightening in September. US 10-year yields rose by about 49bp between the end of August and 28 September, to 5.24%, their highest since 2007. With Brent above US$100 a barrel and inflation rising again, the conversation across the G10 has turned firmly towards tightening.

Our Global Macro Sentiment Indices read news on each economy’s monetary-policy outlook every hour and score each headline from −1, fully dovish, to +1, fully hawkish. Because it is built from news rather than prices, directional sentiment gives an independent, real-time read to set alongside market pricing and forecasts.

Read the full analysis here: GMSI_g10_policy_outlook_Q4_2026

What the signal is telling us

• The turn is broad. A year ago directional sentiment leaned dovish in nine of the G10 economies. Today it is positive in nine, and six sit firmly in hawkish territory.
• Europe is where it is shifting fastest. The ECB and the Bank of England are the most unusual against their own past two years, even though their sentiment is only modestly hawkish.
• The build-up can be seen as it forms. RBA sentiment climbed steadily through September into its hike.

How quickly sentiment has changed

Through most of 2025 directional sentiment leaned dovish across the G10 central banks eased. It began to turn around the new year, first in Australia, then in Norway and New Zealand by the spring, and more broadly through the summer as the energy shock took hold. Japan is the exception, hawkish throughout as the Bank of Japan continued to normalise policy.

Sentiment and the market move together

Where sentiment turned hawkish, local yields rose alongside it, most clearly in Australia, New Zealand, Sweden and the UK. That is co-movement rather than cause and effect, and sentiment does not lead the next move in yields. Its value lies in reading the narrative behind a move as it happens, and in confirming or challenging a view as the story develops.

Where sentiment stands into Q4

The Q4 decision run opens on 28 October with the Fed, the Bank of Canada and the RBNZ, and runs through to the SNB on 10 December. On balance, we see hawkish pressure as most likely to keep building in Europe, where sentiment is most unusual against its own past two years.

Directional sentiment runs from −100 to +100. vs past two years compares it with the bank’s own last two years, where +100 is the top of its range.

Three meetings stand out

• Bank of England, 5 November. After a six-to-three hold, the meeting looks live. Sentiment of +40 is moderate in outright terms but well above its own past two years.
• ECB, 29 October. Coverage points to December, when new projections are due. Yet German coverage is the most unusual in the G10 against its own past two years, which we read as a debate turning quickly from a low base.
• RBNZ, 28 October. With sentiment at +59, below its July high of +81, our reading does not point to pressure for an earlier move.

How we build the signal

Every headline on an economy’s monetary-policy outlook receives a directional score from −1, fully dovish, to +1, fully hawkish. Each reading uses only data dated up to that day, and gauges built on news from fewer than 20 of the past 30 days carry a warning for each G10 central bank applicable.

The index measures the balance of the policy debate. It is not a forecast of decisions or yields, and nothing here is investment advice.