Central Bank Policy Tracker July 2026

Economics Research 31 July 2026 | 5:45PM EDT

n Recent policy changes: Central bank actions have shifted more hawkish due to Jan Hatzius | the war in Iran. In DMs, no central banks lowered and 39% raised rates over the Goldman Sachs & Co. LLC

last three months. In EMs, 16% cut rates and 13% raised rates over the same Joseph Briggs | period. Our Global Financial Conditions Index (GS FCI) has tightened by 9bp over Goldman Sachs & Co. LLC the last three months, reflecting little change in DMs but 16bp of tightening in Sarah Dong EMs (largely driven by a pullback in equity prices). At the country level, financial | Goldman Sachs & Co. LLC conditions have tightened the most in South Korea (+85bp), Indonesia (+57bp), Megan Peters and China (+47bp) and eased the most in Thailand (-74bp), Romania (-70bp), | Goldman Sachs International and Switzerland (-60bp). n Forecast updates: We have made several policy rate forecast revisions over the last 30 days. In Australia, we removed the final hike from our forecast (which we viewed as a very close call) following a softer-than-expected Q2 inflation print, and now expect the RBA to remain on hold this year before normalizing rates via a gradual easing cycle in 2027. In New Zealand, we added a 25bp hike in December following an upside inflation surprise. In Hungary, we lowered our end-2026 policy rate forecast by 75bp to 4.5%, reflecting both our expectation for a faster pace of easing in response to Hungary’s exceptionally weak inflation dynamics, and a downgrade to our estimate of the neutral rate (itself reflecting our expectation that the MNB will lower its inflation target from 3% to 2%, a necessary early step for Euro adoption). Elsewhere, we raised our end-2026 forecasts in Ukraine (+250bp), Russia (+150bp) and Indonesia (+50bp), but lowered them in Egypt (-200bp), South Africa (-25bp) and Kazakhstan (-25bp). n Current forecasts: We forecast that global central banks will cut rates by 0.2pp to 3.1% (on a GDP-weighted basis) over the next four quarters. We expect that DM central banks will lower policy rates by 14bp on average over the next four quarters, reflecting cuts in the US (-25bp), Australia (-50bp) and the UK (-50bp) which are partly offset by hikes in New Zealand (+50bp), Sweden (+50bp) and Japan (+25bp). We expect that EM central banks will cut rates by 49bp on average, reflecting 228bp of cuts in CEEMEA and 63bp in Latin America, but 3bp of hikes in Asia. n Forecasts relative to consensus and current pricing: Our end-2026 policy rate forecasts are dovish relative to market pricing (our forecasts are below pricing in 90% of DMs and 71% of EMs; above in no DMs and 29% of EMs) but are balanced relative to consensus globally (below consensus in 58% and above in

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Goldman Sachs Central Bank Policy Tracker

30% of economies). n Balance sheet policy: Balance sheets as a share of GDP remain particularly elevated relative to their 2019 levels in New Zealand (8pp higher) and Australia (4pp). In the US, we see little support among Fed officials for abandoning the ample-reserves approach and consequently see only limited room to shrink the balance sheet through regulatory and supervisory changes that reduce banks’ demand for reserves balances.

Exhibit 1: Global Central Banks Have Mostly Either Held or Hiked Over the Last Three Months

Source: Goldman Sachs Global Investment Research

Exhibit 2: We Forecast Further Policy Rate Declines in the UK, US, and Some EMs, but Rate Hikes or Holds in Most DMs Over the Next Four Quarters

Source: Goldman Sachs Global Investment Research