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Global Rate Cuts: Momentum Fades in Advanced Economies
14 Dec
Summary
- Advanced economies' easing cycle shows signs of losing momentum.
- Fed's outlook uncertain; BOE rate cut faces scrutiny.
- ECB may present higher growth forecasts, hinting at a policy pivot.
The final monetary policy decisions of 2025 for advanced economies suggest the easing cycle may be over or lacking fresh impetus. What began with expectations of limited rate cuts is now seeing central bankers pause to evaluate progress. The US Federal Reserve's cautious stance on further reductions follows a quarter-point cut, as the global economy appears to have weathered trade tensions better than anticipated.
The Bank of England's anticipated borrowing cost reduction on Thursday is expected to draw significant attention, offering clues about the extent of the easing cycle. Meanwhile, the European Central Bank is poised to release improved growth forecasts, potentially reinforcing their current rate hold and shifting focus towards the timing of any future tightening.
In contrast to the cautious approach in advanced economies, several central banks in emerging markets, including Mexico and Thailand, are expected to continue their easing cycles. This week also features key economic data releases from China, the UK, Canada, the US, and Brazil.
