In the first central bank meetings of 2025, a shift in monetary policies is evident as economic trajectories diverge. While interest rates remain steady, the Eurozone is cutting rates, and Japan is notably in a hiking mode.
Last year, the prevailing global stance favored cautious rate cuts, with seven out of ten major central banks in developed markets easing policy.
Current stances of selected central banks are as follows:
- The Swiss National Bank has been proactive in monetary easing, reducing its benchmark rate from 1.75% to 0.5% in 2024. Another potential 25 basis points cut is anticipated in March.
- The Bank of Canada recently cut its rate to 3% due to reduced growth forecasts and concerns about potential economic damage from a U.S.-triggered tariff war.
- Sweden's Riksbank cut rates by 25 bps to 2.25% to stimulate slow growth, with no further cuts expected unless economic conditions change.
- The Reserve Bank of New Zealand has reduced rates by 125 bps since August, and a possible additional 50 bps cut is on the table.
- The European Central Bank recently cut rates by 25 bps and could potentially implement three more cuts this year.
- The Federal Reserve held rates and adopted a wait-and-see approach until inflation and job data support a rate adjustment.
- The Bank of England is expected to cut rates by 25 bps next week, balancing concerns of stubborn inflation and a slowing economy.
- Norway's central bank plans three rate cuts this year, aligning with market expectations.
- The Reserve Bank of Australia is likely to cut rates in February, with expectations of further cuts throughout the year.
- The Bank of Japan continues with rate hikes, projecting further increases in the near term.
These developments highlight the varied monetary policy responses among major central banks in 2025.