Rich World’s Rate-Cut Momentum Is Fading Away

Photographer: Jason Alden/Bloomberg

(Bloomberg) — The final flurry of global monetary policy decisions for 2025 is likely to showcase how the easing cycle in advanced economies either lacks fresh impetus or is effectively over.

A year that dawned with the prospect of successive, if limited, rate cuts across the rich world is set to end with that momentum losing steam. Instead, central bankers are stepping back to assess how their progress so far is impacting growth and inflation.

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The Federal Reserve’s cloudy outlook for any further reductions following Wednesday’s quarter-point cut is one part of that backdrop. Another is that the global economy has apparently weathered US President Donald Trump’s tariff onslaught better than expected.

Among multiple decisions due on Thursday and Friday, the Bank of England’s probable reduction in borrowing costs may draw the most scrutiny. It’s an outcome that investors will look to for clues on whether it could be one of the BOE’s final moves of the cycle.

The European Central Bank, meanwhile, is set to present higher growth forecasts that may cement the tentative rate hold officials have enforced since May, with questions to President Christine Lagarde likely to focus on how soon a pivot to tightening could transpire.

Policymakers in four other European countries are expected to keep borrowing costs steady. The Bank of Japan, meanwhile, is widely expected to hike.

What Bloomberg Economics Says:

“Bloomberg Economics’ ECBspeak Index, our proprietary central bank sentiment indicator, suggests the hawks have the momentum and their preferred outcome for the December meeting — no change in interest rates — will surely be delivered.”

—David Powell and Simona Delle Chiaie. For full analysis, click here

In comparison to the advanced-economy narrative of a potentially shifting tide for policy, the direction of travel elsewhere is less clear. Several other central banks, from Mexico to Thailand, are set to extend easing cycles in the coming week.

Elsewhere, multiple data releases in China, inflation figures from the UK to Canada, jobs numbers in the US, and growth figures in Brazil will be among the highlights.

Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.

US and Canada

A deluge of delayed data will offer traders and policymakers a much-anticipated snapshot of the US labor market and broader economy.

Following the Fed’s latest decision to lower interest rates, the November jobs report — due on Tuesday — will begin to shape the 2026 outlook for borrowing costs.

Economists project a 50,000 increase in payrolls and a 4.5% unemployment rate, consistent with a sluggish, but not rapidly deteriorating, labor market.

The report will also include an estimate of October payrolls — figures that were delayed by the federal government shutdown. However, the Bureau of Labor Statistics said it was unable to conduct its survey of households for the month, and as a result won’t publish an October unemployment rate.

The fallout from the longest-ever government shutdown extended to another high-profile economic indicator: the consumer price index. The November CPI report on Thursday will have no monthly changes for most of the price categories, including the overall CPI and core measure that excludes food and energy.

That’s because the BLS said it was unable to collect much of the October price information. November data collection was also delayed by the government shutdown, adding another caveat to the widely-watched figures.

The US will also issue figures on October retail sales. Excluding autos and gasoline, economists forecast an acceleration in outlays that would suggest solid consumer demand at the start of the fourth quarter.

Looking north, Canadian inflation likely remained close to the 2% target in November, with the Bank of Canada anticipating that core metrics will point to about 2.5% growth in underlying price pressures. The central bank has signaled it’s comfortable holding rates steady unless the outlook for inflation and growth changes materially. Governor Tiff Macklem will give his final speech of 2025 on Tuesday.

Asia

The week in Asia is book-ended by two key events at the BOJ. On Monday, Japan’s central bank releases its Tankan survey, which is expected to show business sentiment at large manufacturers improved a tick in the three months through December, extending the index’s streak of relatively upbeat, double-digit readings to nine quarters.

That outcome would back the case for Governor Kazuo Ueda’s board to boost the benchmark rate to 0.75% on Friday in what would be the first hike since January; authorities have sent multiple signals meant to prepare investors for a hike. The BOJ’s move will likely be the second or third rate change — in opposite directions — in the region in the coming week.

The Bank of Thailand and Bank Indonesia both meet on Wednesday, with the BOT seen reducing borrowing costs by a quarter point. Economists are evenly split on whether BI might do the same. Taiwan’s central bank is expected to hold policy settings steady a day later.

In data, China will release a flurry of figures likely to paint a bleak picture for November, with the year-to-date slide in fixed-asset investment seen deepening to minus 2.3% as the slump in property investment worsens to minus 15.4% for the first 11 months. Growth in retail sales and industrial output is predicted to hold at paces near the weakest in at least a year.

Japan’s national CPI figures on Thursday are expected to show consumer inflation remained at or above the central bank’s 2% target for a 44th consecutive month, delivering more support for a rate hike the following day.

New Zealand may show that economic growth returned to positive territory in the third quarter. Sri Lanka also releases GDP data this week.

Asia gets a few flash PMI readings for December on Tuesday, with reports from Australia, Japan and India. Australia’s consumer confidence data are due the same day. Trade figures will be published during the week in India, Malaysia, New Zealand and Japan.

Europe, Middle East, Africa

The key question overshadowing the BOE decision on Thursday is whether Governor Andrew Bailey — the swing voter for no change last time round — will now favor a rate cut that could help stimulate the economy. That outcome is predicted by all economists surveyed by Bloomberg.

Wage data on Tuesday and inflation numbers on Wednesday may still prove crucial for the outcome. Consumer-price growth for November is expected to have slowed to 3.4%, a six-month low that’s still notably above the BOE’s 2% target.

The ECB, meanwhile, is likely to face scrutiny on how far officials share the view of hawkish Executive Board member Isabel Schnabel that their next move may be a rate hike. New quarterly forecasts will feature their first judgment of the inflation outlook for 2028.

Data highlights within the euro region include industrial production on Monday, flash readings of purchasing manager indexes on Tuesday, and Germany’s closely-watched Ifo business confidence gauge the following day.

Here’s a quick rundown of other central bank decisions around the wider region:

On Tuesday, Morocco’s central bank may keep its rate at 2.25%, though a lender’s survey shows investors split on a potential cut. Observers are also watching for a potential change in leadership; Governor Abdellatif Jouahri has been in office for over 20 years.

Hungarian policymakers are expected to keep their own benchmark unchanged the same day.

On Thursday, Sweden’s Riksbank is widely expected to leave its rate at 1.75%. Investors will look for clues on whether officials will stick to their outlook for a gradual increase to restraint from the end of next year, or indications that the door for easing isn’t completely shut.

In neighboring Norway, the central bank is also poised to keep its rate unchanged. While core price growth has remained elevated, a softening of the economic outlook could support Norges Bank’s scenario for easing to continue at a glacial annual pace of one quarter-point cut through 2028.

The Czech central bank is predicted to hold steady on that day as well.

And with inflationary pressures easing for now, the Bank of Russia may opt for another cut to its key rate on Friday. A planned tax hike and elevated inflation expectations point to a more cautious, 50 basis-point step after larger moves at prior meetings.

Consumer-price data will be released in some key economies:

Data on Monday will likely show inflation in Nigeria eased further, to 14.3% in November from 16.1%. A drop in food prices, helped by the harvest, probably extended the slowdown, strengthening the case for rate cuts to resume in January.

The same day, Israeli data is expected to show inflation staying at about 2.4% in November.

And on Wednesday, South African figures may reveal consumer-price growth steady at 3.6% in November as food costs continued to soften.

Latin America

Three of the region’s big inflation targeting central banks — Chile, Mexico and Colombia — will hold their final rate-setting meetings of the year in the coming week.

Banco Central de Chile is positioned to end 2025 with a quarter-point rate cut, to 4.5%, to be followed by its quarterly monetary policy report on Wednesday.

Banxico has reason to fret over Mexico’s persistent inflation pressures, but most board members see cooling ahead and the economy in a delicate state. A solid consensus of analysts expect a 12th straight cut in borrowing costs, to 7%.

Colombia’s BanRep — after a surprisingly mild November inflation report — can probably rally around a decision to hold rates at 9.25%.

Brazil watchers will have a lot to consider in the coming week. GDP-proxy data is likely to show LatAm’s No. 1 economy just holding up in the face of tight financial conditions. Minutes of the central bank’s Dec. 10 decision to keep its key rate at 15% will also be closely watched.

Third-quarter output data should show Argentina dodged a technical recession, though analysts surveyed by the central bank have marked down their 2025 GDP forecast to 4.4% from 5% in July.

In Peru, GDP-proxy data should show the Andean economy posting a 19th straight month of year-on-year expansion in October, amid rising activity and domestic demand, while Lima’s jobless rate may have ticked lower in November.

–With assistance from Brian Fowler, Laura Dhillon Kane, Vince Golle, Monique Vanek, Robert Jameson, Mark Evans, Ott Ummelas, Charlie Duxbury, Beril Akman, Tony Halpin and Isobel Finkel.

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