rewrite this title How 2026 Interest Rate Shifts Will Impact Your Portfolio

A week filled with important macroeconomic data and key meetings of four central banks— including the Czech National Bank—lies ahead. While the US Federal Reserve cut interest rates again last week, the rest of the world is heading in a very different direction. What can investors take from this? According to eToro’s Retail Investor Beat survey, Czech investors are watching this topic closely.

While European economies are showing signs of stabilisation, the US continues its effort to tame elevated inflation. Although the Fed lowered rates to 3.5–3.75% last week, Chair Powell framed the move as a cautious response to economic data rather than the start of an aggressive easing cycle. Unity within the bank is also breaking down. For the first time since 2019, three members voted differently from the majority—one calling for faster cuts, two favouring a slower pace.

The Czech National Bank’s rate currently stands at 3.5%. Markets expect it to remain around this level for most of 2026. The CNB itself anticipates that rates will stay roughly where they are next year, while some analyses suggest a possible increase to 3.75% by the end of next year if inflationary pressures in services persist. Czech retail investors, however, expect rates to fall. According to eToro’s Retail Investor Beat survey, as many as 35% of investors see this scenario as likely in the coming year, far more than those who think rates will increase at 23%.

Falling interest rates benefit equity investors because they reduce returns on savings products, bonds, and money market funds. They also stimulate economic growth, partly by improving financing conditions for companies. This could become a key driver for the market in 2026. Czech investors are responding accordingly: eToro survey data shows that up to 27% of Czech retail investors plan to increase their investments in reaction to lower rates.

The Bank of England will likely cut rates to 3.75% after several months of pause, aiming to strike a balance between elevated inflation and a tight labour market. UK inflation stands at 3.6%, well above the central bank’s 2% target. Markets, however, expect only one rate cut from the BoE next year.

The European Central Bank has kept rates at 2% since the summer and does not expect to change monetary policy any time soon. Markets currently see a higher probability of the ECB raising rates in 2026 than lowering them. Concerns about the impact of Trump’s tariff policy have not materialised, and a combination of strong economic data and early signs of rising prices—especially in services—is significantly reducing the scope for further easing.

Japan’s central bank, by contrast, is likely to raise rates from 0.5% to 0.75%. Strong business sentiment, inflation above target, and stable wage-growth expectations support the move. However, real interest rates (adjusted for inflation) remain deeply negative.

After rate cuts this year, markets may begin to feel the effects of a looser monetary stance more strongly next year. Stable European economies combined with room for further easing in the US create a supportive backdrop for growth. Still, upcoming macroeconomic data and shifts in global trade policy will remain crucial to watch.

This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.