Published by Global Banking & Finance Review®
Posted on January 30, 2025
4 min readLast updated: January 26, 2026
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Major central banks are diverging in their 2025 policies, with the US holding rates, the euro zone cutting, and Japan hiking.
By Alun John
LONDON (Reuters) - The first central bank meetings of 2025 suggest it will be a year in which policymakers go their own way as economic paths diverge, as the United States holds interest rates steady, the euro zone cuts, and outlier Japan is firmly in hiking mode.
That's a change from last year where the global consensus was for cautious rate cuts, with seven of the world's 10 major, developed-market central banks easing policy.
Here's a look at where they currently stand:
1/ SWITZERLAND
The Swiss National Bank has been at the forefront of monetary easing and, in 2024, took its benchmark rate from 1.75% down to 0.5%.
With inflation well within the SNB's 0-2% target range, and the central bank concerned about a strong franc, investors see a further 25 basis points cut at its March meeting as likely. Chairman Martin Schlegel has not ruled out taking rates back into negative territory.
2/ CANADA
The Bank of Canada on Wednesday trimmed its key policy rate by 25 bps to 3%, cut growth forecasts and warned that a tariff war triggered by the United States could cause major economic damage.
U.S. President Donald Trump has promised to impose a 25% tariff on all imports from Canada on Saturday. BoC chief Tiff Macklem said while monetary policy "can't offset the effects of higher tariffs ... It can sort of smooth that adjustment."
Market pricing indicates at least one more rate cut this cycle, though more likely in April after a pause in March.
3/ SWEDEN
Sweden's Riksbank also cut rates by 25 bps on Wednesday, to 2.25%, to boost sluggish growth.
Governor Erik Thedeen said the Riksbank is probably finished with rate cuts, but the outlook is uncertain and it stands ready to act if the outlook for inflation or the economy changes.
4/ NEW ZEALAND
The Reserve Bank of New Zealand has cut the official cash rate by 125 bps since August as inflation eased but economic activity also contracted, pushing New Zealand into recession in the third quarter.
It has indicated it could cut by a further 50 bps when it meets next month, though its chief economist said on Wednesday the RBNZ needs to "feel our way as the (official cash rate) gets closer to neutral."
5/ EURO ZONE
The European Central Bank cut interest rates by 25 bps as expected on Thursday and kept more easing on the table, sticking to its view that euro area inflation is increasingly under control.
That is the fifth ECB-POLICY-3fdc7763-f2c0-4c30-b494-8614852eaf43>ECB rate cut since June 2024, and traders are fully pricing three further 25 bps cuts this year.
6/ UNITED STATES
The Federal Reserve held interest rates steady on Wednesday and Chair Jerome Powell said there would be no rush to cut them again until inflation and jobs data make it appropriate.
This was the Fed's first meeting since U.S. President Donald Trump returned to office. Powell said officials are "waiting to see what policies are enacted" before judging their effects on inflation, employment and overall economic activity.
7/ BRITAIN
The Bank of England has been more cautious than some of its peers, but is expected to cut rates by 25 bps next week, its third such move this cycle.
The BoE has to manage conflicting signals from stubborn inflation, particularly services, on the one hand and a slowing economy on the other. Traders expect two further cuts this year, roughly once a quarter, in addition to a move next week.
8/ NORWAY
Norway's central bank has yet to cut rates this cycle, and held them at a 17-year high of 4.5% last week.
Still, Norges Bank plans to cut rates three times this year, according to its latest forecasts, expectations with which current market pricing is broadly aligned.
9/ AUSTRALIA
The Reserve Bank of Australia is also getting closer to its first rate cut this cycle after Wednesday data showed consumer inflation cooled to 2.4% in the December quarter, its slowest in almost four years.
Markets now see around an 80% chance of a 25 bps cut in February, and are fully pricing a total of three such moves across this year.
10/ JAPAN
The Bank of Japan, the only G10 central bank in a hiking cycle, last week raised rates to 0.5%, their highest since the 2008 global financial crisis.
It also revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target.
A former policymaker said on Tuesday it will likely raise rates again in June or July, and seek to lift rates to at least 1.5% in the next two years.
(Reporting by Alun John. Editing by Dhara Ranasinghe and Mark Potter)
The Swiss National Bank has set its benchmark rate at 0.5%.
The Bank of Canada trimmed its key policy rate by 25 basis points to 3%.
The Federal Reserve held interest rates steady and is not rushing to cut them until inflation and jobs data warrant it.
The Bank of England is expected to cut rates by 25 basis points next week, its third cut this cycle.
The Bank of Japan raised rates to 0.5%, the highest since the 2008 financial crisis, and plans to continue increasing rates.
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