– This is the script of CNBC's news report for China's CCTV on October 26, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
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Central banks are back in the spotlight for this week.
The developments, together with mixed U.S. economic data in recent months, increase the likelihood the Fed will keep interest rates near zero for the rest of 2015, according to analysts and traders.
While Fed officials have repeatedly said an increase in the federal-funds rate this year isn't off the table, many analysts believe U.S. policy makers are loath to raise rates too soon.
Fed-funds futures, used by investors and traders to place bets on U.S.
central-bank policy, on Friday showed an 8% likelihood of a rate increase at the Federal Open Market Committee policy meeting ending Wednesday, according to data from CME Group.
The odds Friday were measured at 37% for an increase at the Dec policy meeting.
[TAN (t) TECK LENG UBS Wealth Management Asian FX strategist] "103836 If you look at December, what has priced in... 37% but, what's important is when is the full-hike been priced in. That is a more June-July meeting, that is tremendously underpriced. Our expectation is that December is actually a very real possibility. So if you do get a December hike, that means 63% of the market will be caught off guard, and that would bring the dollar a lot stronger from here. 103900 "
Alongside China's rate cut, sentiment was buoyed after the European Central Bank (ECB) signaled willingness to extend its bond-buying program on Thursday.
(VO-ECB Mario Draghi+EURO)
ECB President Mario Draghi said the bank's 1 trillion euro bond-buying program policy would need to be "re-examined" in December, with the governing council ready to use all available instruments within its mandate.
This suggests that the quantitative easing program could be extended beyond September 2016.
[SAKTIANDI SUPAAT, Maybank Head of Global FX Strategy] "105105 the whole purpose is to make the euro weaker, so if the US moves first or any of the data pushes the euro dollar much lower ahead of the dec moo ve that could result a delay in terms of an ecb move. you need to look at the european economic fundamentals situation, which is one main reason why they are doing this as well.105136 "
The BOJ is also gathering attention as a run of downbeat Japanese indicators has fanned expectations of further monetary easing.
[TAN TECK LENG UBS Wealth Management Asian FX strategist] "103929 We are looking at the Q3 numbers in terms of growth in Japan. Even though data woudl reveal only in mid Nov, but the BOJ would probably have a good idea of what the number would be by the end of this week. 103943 If Q3 is in contraction, that means Japan would be officially in recession. and they might have to supply the market by easing even though they have consistently denied they don't need to. 103951"
China's easing late on Friday was the latest reminder of the monetary policy divergence taking place between the Federal Reserve and other central banks.
Elsewhere, the Reserve Bank of New Zealand meets on Thursday and the BOJ on Friday.
CNBC's Qian Chen, reporting from Singapore.
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