Written by Alan John, Naomi Rovnick, and Samuel Indyk
LONDON (Reuters) – The Bank of England ended a massive year of central bank interest rate cuts by leaving interest rates unchanged on Thursday, a day after the Federal Reserve eased policy but signaled it would become more cautious in 2025. Ta.
Seven of the world’s 10 major developed market central banks have cut interest rates this year, with only Australia and Norway remaining on hold. Outlier Japan is in hiking mode.
1/ Switzerland
The Swiss National Bank, which has been at the forefront of monetary easing, last week cut the rate by an unexpectedly large 50 basis points (bps) to 0.5%. This is the lowest level since November 2022, and the largest for the bank in about 10 years.
Switzerland’s annual inflation rate was recently reported at just 0.7%, and the Swiss central bank, alarmed that the safe-haven currency Swiss Franc is rising beyond what domestic exporters can bear, has warned it will continue to do so next year. He said it could lower borrowing costs.
2/Canada
Last week, the Bank of Canada also cut its policy interest rate by 50 bps to 3.25%, the first consecutive 0.5 point cut since the outbreak of the coronavirus.
He signaled that further easing would be phased in after annual inflation accelerated to 2%, but the market remains buoyant next month as Canada’s weak economy is threatened by U.S. President-elect Donald Trump’s tariff proposals. The odds of a 25bp rate cut are 50%.
3/ Sweden
Sweden’s Riksbank on Thursday cut its policy rate by 0.5 percentage points to 2.5%, in line with expectations, but warned that the pace of easing could slow in early 2025 after cutting rates by 150 basis points so far this year. suggested.
The central bank said it supported a more interim approach, noting that monetary policy affects the economy over time.
4/ New Zealand
New Zealand’s economy slipped into recession in the third quarter, a dire result that cements the need for more aggressive interest rate cuts, data showed on Thursday.
The Reserve Bank of New Zealand next meets in February, and the governor has said there is room for a 50bp rate cut.
So far this cycle, the cash rate has been cut by 125 basis points to 4.25%, and the market is pricing in a further cut of about 100 basis points by the middle of next year.
5/ Eurozone
The ECB is firmly in easing mode, cutting deposit rates by 25bps to 3% last week for the fourth time this year, leaving room for further cuts.
It also suggested further rate cuts were possible by removing language about keeping interest rates “sufficiently restrictive,” an economic term that refers to the level of borrowing costs that inhibits economic growth.
The market is pricing in additional tightening equivalent to approximately 110 basis points by the end of 2025.
6/ United States
