Three more Fed hikes this year, ECB and BoJ on hold

Despite economic activity slowing in Q1, we expect the Fed to press on with three more rate hikes this year, not least because inflation has been higher than anticipated in recent months. But in the euro-zone and Japan, where both economic activity and inflation have been subdued, policy-makers will probably leave rates on hold for a long time to come. Meanwhile, we no longer expect the Bank of England to raise rates in May but we still think it will tighten policy more rapidly than markets anticipate over the coming year or two.