The Reserve Bank of Australia this week held its cash rate at 4.35%, halting a sequence of increases, but governor Michele Bullock delivered an unmistakably hawkish message: the board stands ready to raise rates again if inflation does not retreat towards its 2-3% target. Viewed from Sydney, the decision offers a temporary reprieve for heavily indebted households, yet Bullock’s words — “including increasing the cash rate target further if required” — were deployed as a secondary policy tool, a verbal tightening that markets largely dismissed as bluff. Australian futures pricing suggests investors believe the next move is more likely down than up, a divergence that underscores the credibility challenge facing the central bank.

In Brasília, the picture is more nuanced. The Copom was widely expected to deliver a third consecutive quarter-point cut, lowering the Selic to 14.25%, after a ceasefire between the United States and Iran reopened the Strait of Hormuz and eased immediate supply fears. But Brazilian economists describe a “perfect storm” of fiscal expansion under President Lula, unanchored inflation expectations, and extreme weather events that threaten food prices. The Focus survey shows year-end IPCA forecasts climbing to 5.3%, well above the 3% target, and a growing number of analysts now believe the easing cycle could be the shallowest in history — possibly ending with this week’s move. The central bank, they warn, may be forced to adopt a more hawkish tone and pause sooner than previously thought.

From Frankfurt, the European Central Bank is sounding its own alarm. Chief economist Philip Lane cautioned that eurozone inflation is likely to remain above 3%, driven by energy costs that have not returned to pre-crisis levels despite the US-Iran accord. With Brent crude hovering around $80-81 a barrel, Lane noted that four months of elevated oil prices have embedded a persistent inflationary impulse. ECB President Christine Lagarde reinforced the message, insisting that inflation must be brought under control before it becomes entrenched. The ceasefire, while welcome, has not delivered the disinflationary dividend many had hoped for.

The geopolitical backdrop remains fragile. The US-Iran agreement to resume traffic through the Strait of Hormuz has calmed the most acute disruption, but the trajectory of oil prices has not reverted to the levels seen before the February attacks on Iran. Analysts in London note that the risk premium has only partially unwound, reflecting lingering uncertainty over compliance and broader Middle Eastern tensions. This keeps a floor under energy costs globally, complicating the task for inflation-targeting central banks from Sydney to São Paulo.

Looking ahead, the world’s major central banks are charting divergent courses. The US Federal Reserve, meeting on the same “superquarta”, was expected to hold rates steady, maintaining a patient stance. Australia’s RBA is leaning hawkish, Brazil’s Copom is cautiously easing but may soon stop, and the ECB is bracing for above-target inflation. The common thread is that the post-ceasefire environment has not resolved the underlying price pressures. Whether Bullock’s threats prove credible, or whether Brazil’s easing cycle survives the fiscal headwinds, will depend on how quickly oil markets truly normalise — and on the political will to complement monetary restraint with fiscal discipline.