In the first central bank interest rate adjustments of 2025, indications point towards a year where influential players, both in developed and emerging economies, are moving in different directions for the time being.
Last year saw the most significant global rate cut coordination in 15 years as inflation was reined in. However, the current year has commenced with policymakers navigating through uncertain and challenging conditions.
Three out of the four G10 central banks overseeing the world's most traded currencies continued to lower rates in their recent meetings, whereas a country where rate hikes are scarce raised interest rates for the second time in less than a year.
While the US and Norway maintained their rates unchanged, Australia, New Zealand, and Switzerland did not hold meetings, and the European Central Bank has recently reduced rates.
These decisions coincide with Donald Trump's return to the White House, where he initiated trade tariff disputes and dismantled multilateral principles and regulatory frameworks.
The Bank of Canada specifically highlighted potential risks for its economy, and the Federal Reserve is adopting a cautious approach to monitor developments from the Oval Office.
In 18 emerging markets sampled by Reuters, there were three rate cuts and one increase in January, with several countries not holding meetings.
Argentina implemented another 250 basis point rate reduction, bringing rates to 45%. South Africa and Indonesia opted for minimal quarter-point adjustments.
Meanwhile, Turkey, grappling with debt concerns, increased rates by 100 basis points for the second consecutive meeting, scheduling another in March under new central bank chief Gabriel Galipolo.
China's central bank maintained rates in anticipation of potential impacts from Washington's tariffs.
Looking ahead, most major economies are poised to continue lowering borrowing costs this year, especially in Europe, Canada, and Australia, particularly if the trade disputes instigated by Trump escalate.