Central Bank Interest Rate Moves in 2025

By Marc Jones and Sumanta Sen
LONDON (Reuters) – The first central bank interest rate adjustments of 2025 indicate a year where major economies will diverge in their monetary policies.

Last year saw the strongest coordinated global rate cuts in 15 years, aimed at controlling inflation. However, the current economic climate presents unclear challenges.

Among G10 central banks, three out of four that met last month—Sweden, the European Central Bank (ECB), and Canada—continued their rate-cutting cycles. Conversely, Japan raised rates for the second time in less than a year.

The U.S. Federal Reserve and Norway’s Norges Bank opted to maintain their rates, while Australia, New Zealand, and Switzerland did not hold meetings. Recently, the Bank of England also cut rates.

This shifts in policy occurred alongside Donald Trump’s return to the White House, where he initiated trade tariffs and proposed dismantling multilateral agreements and regulations.

The Bank of Canada cautioned about potential risks to its economy, while the Fed is closely monitoring developments from the Oval Office.

Emerging Market Trends

In January, among 18 emerging markets sampled by Reuters, three countries slashed rates, while one raised them. However, six did not hold meetings during this period.

Turkey implemented a significant cut of 250 basis points, bringing its rates to a striking 45%. South Africa and Indonesia made slight cuts of 25 basis points.

Brazil, grappling with debt concerns, increased its rate by 100 basis points for the second consecutive meeting, setting rates at 13.25%.

China’s central bank opted to stay cautious, waiting for the impact of U.S. tariffs.

Looking at major economies, most expect continued rate reductions this year, with Europe, Canada, and Australia likely to see the most significant falls, particularly if trade tensions escalate due to Trump’s policies.