Markets & Transmission
Why do markets move before central bank decisions?
Markets price the expected path of policy, not just the announced rate. The same decision can therefore produce very different reactions depending on positioning, prior expectations, guidance and what the decision implies for growth and inflation.
How to read it
Compare the decision with the pre-meeting curve. The surprise relative to what was priced is usually more informative than the headline change itself.
Watch the policy-rate path, front-end OIS pricing, the 2s10s or equivalent curve shape, inflation expectations and the central bank’s own communication. Together they show whether markets are repricing the current decision, the next cycle, or the credibility of the framework.
Central-bank effects are regime-dependent. The same policy action can produce different market outcomes when inflation, growth, positioning or prior expectations differ.