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BOJ raises interest rates to highest in three decades
The Bank of Japan has raised its short-term rates to the highest level in three decades, as inflation has remained above its target level for nearly four years. The bank increased its benchmark by a quarter of a percentage point to around 0.75% in a much-anticipated decision. This is the highest it has been since 1995. This comes as Prime Minister Sanae Takaichi is keen to bring inflation down, but also needs the cost of government borrowing to be cheap. It was also the first time the central bank hiked rates since January, and the first under Takaichi and governor Kazuo Ueda took up their current role. Data released this month showed that Japanese inflation has remained above the target level of 2% for 44 months. It came to 2.9% in November, a drop from 3% in October. High inflation has pressured real wages that have been declining for 10 months in a row, according to labour ministry data. The BOJ predicts that core inflation is likely to decelerate below 2% from April to September 2026, due to a slower rise in good prices as well as the effects of government measures aimed at addressing rising prices. In a statement, the BOJ said while weakness has been seen in the economy, corporate profits are likely to re
Interest rates
Bank of England cuts interest rates ahead of holidays
The Bank of England has cut interest rates to its lowest levels since 2023, in a close decision vote with 5 to 4 in favour. With the vote going through, the rates now sit at 3.75%, down from 4%. Concerns about weak economic growth and rising unemployment have outweighed inflation worries, with price pressures easing but still above the Bank’s 2% target. Policymakers expect inflation to approach 2% by mid-next year, partly due to tax and spending measures in last month’s Budget. The Bank's next meeting to examine interest rates is on February 5th, while concerns about inflation and rising unemployment persist. Inflation in Britain is expected to reach the Bank's 2% target by the middle of next year, and interest rates are likely to continue trending downward as well. "We still think rates are on a gradual path downward but with every cut we make, how much further we go becomes a closer call," said the Bank's governor, Andrew Bailey.
Interest rates
Fed delivers third cut; signals slower path ahead
The United States Federal Reserve approved its third interest rate reduction of the year on Wednesday (Thursday AEDT), but the move underscored deep divisions within the central bank and hinted at a far more cautious pace of easing ahead. In a 9-3 decision, the Federal Open Market Committee (FOMC) lowered its benchmark federal funds rate by a quarter percentage point to a range of 3.5%-3.75%, delivering what markets had widely dubbed a “hawkish cut”. The decision was accompanied by an unusually large number of dissents, highlighting an internal struggle over the appropriate direction for monetary policy. Three policymakers voted against the move, the first time such a split has appeared since September 2019, with Governor Stephen Miran pushing for a larger half-point cut, while Kansas City President Jeffrey Schmid and Chicago’s Austan Goolsbee preferred to hold rates steady. The disagreement reflects the broader ideological divide within the Fed. Hawks remain focused on persistent inflation pressures, advocating for tighter policy, while doves argue that a cooling labour market warrants more support. Miran, who is set to leave the Fed in January, registered his third consecutive “no” vote, while Schmid dissented for th
Interest rates
RBA holds rates steady amid rising inflation
The Reserve Bank of Australia (RBA) has unanimously agreed to hold cash rates steady at 3.6%, citing caution as inflation rises. The decision follows an increase in inflation in October and an uptick in annual economic growth rates last quarter. The RBA last cut interest rates in August, with rates being lowered by 0.75% across 2025. “The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,” wrote the RBA Governance Board. “Private demand is recovering. Labour market conditions still appear a little tight but further modest easing is expected. The Board therefore judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve.” October’s increase in underlying inflation was likely “due to temporary factors and there is uncertainty about how much signal to take from the monthly CPI data", the Board wrote. “Nevertheless, the data do suggest some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring.” The Board did not consider cutting rates this meeting, RBA Governor Michele Bullock said at a press conference, and it d
Interest rates
BOJ faces catch-22 as govt bond yields hit new highs
With borrowing costs rising rapidly and government bond yields surging to levels unseen in decades, the Bank of Japan (BOJ) is confronted with nudging interest rates higher - risking even steeper yields and more pressure on a fragile economy - or pausing, possibly even easing, which could fan inflation. Yields on Japanese government bonds have been climbing steadily, with the 10-year benchmark touching 1.917% on Thursday, the highest since 2007. Longer-dated bonds have followed suit: the 20-year hit 2.936%, a level last reached in 1999, while the 30-year rose to a record 3.436%, according to LSEG data. The BOJ scrapped its long-running yield curve control framework in March 2024, abandoning the cap that kept 10-year yields around 1%. While that shift coincided with the end of Japan’s negative interest rate era, inflation has now stayed above the bank’s 2% target for more than three and a half years, This is adding pressure on policymakers to tighten further as higher yields threaten to spiral. Analysts warn that a return to aggressive bond-buying or yield caps could weaken the yen again, pushing up the price of imports, a problem Japan is already dealing with. Meanwhile, rising yields inflate the government’s

Interest rates
Patient RBA says future rate changes depend on data
The Reserve Bank of Australia (RBA) believed it could continue to be patient about changing interest rates, with future decisions to be driven by economic data, according to the Minutes of the last RBA Monetary Policy Board meeting published on Tuesday. The RBA decided to leave the official cash rate unchanged at 3.60% at its November meeting because the September inflation increase had been larger than expected, the labour market was tight, and the effects of previous rate cuts were not apparent yet. The Board’s strategy to be guided by data and remain cautious could imply a more gradual easing in policy than had been assumed in the August forecasts if certain conditions materialised. “Given that, Members determined that they could afford to be patient while assessing what the incoming data reveal about their judgements on the extent of spare capacity, the outlook for the labour market and the degree of restrictiveness of monetary policy,” the Board said. The market pricing used to condition RBA forecasts implied no further cuts in the cash rate in 2025 and one cut of 25 basis points by late 2026, and more than half of market economists did expect rate cuts in 2025 or 2026, the Minutes said. Board Member observatio
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Taking a look at global central bank trajectories
Central banks across major economies are taking markedly different routes through the final months of 2025 amid uneven progress in the fight against inflation. From the European Central Bank reaching the terminal point of its easing cycle to the Bank of Japan weighing its first hikes in years, let’s take a deeper look at central bank dynamics across the globe.United States – Fed Begins Easing, but Caution PrevailsThe Fed has started cutting rates after a long pause. In September 2025, it lowered the federal funds rate by 25bp to 4.00–4.25% and followed with another 25bp cut on 29 October to 3.75–4.00%. This brought rates 150bp below their peak in August. Policymakers’ forecasts (the “dot plot”) had signalled roughly two cuts by year-end, and indeed markets initially priced in a third cut by December. However, Chair Powell reiterated that further easing is data‑dependent, warning that a December cut is “not a foregone conclusion”. Inflation in the U.S. remains above target. The Fed’s preferred PCE inflation was about 2.7% year‑on‑year in August (core PCE 2.9%) – down from its 3–4% peaks but still modestly above 2%. This underlies the Fed’s caution: the October statement noted “inflation has moved up since earlier in
Interest rates
Fewer rate cuts possible in this cycle - Bullock
The Reserve Bank of Australia (RBA) may need to ease monetary policy less than previously because it had reduced inflation while growing employment, Governor Michelle Bullock said. She said the resilience of the labour market meant the central bank had started cutting official cash interest rates from a relatively strong position. “When combined with the fact that we hadn't raised rates particularly high, this could mean that less easing and monetary policy is needed in this episode compared to previous ones,” Bullock noted at the post-meeting press conference. “So the Board will remain cautious, driven by what the incoming data tell us about the outlook.” She was speaking after the RBA Monetary Policy Board’s unanimous decision to keep the official rate, which influences borrowing costs across the economy, on hold at 3.6% for the second time in three months. The forecast in the August Statement of Monetary Policy that underlying inflation would rise above 3% in the coming quarters before settling at 2.6% in 2027 was based on a technical assumption of one more rate cut in 2026. Asked about the risk inflation could “get away” and how confident she was that monetary policy was restrictive enough, Bullock said: “It'
Interest rates
Australia’s central bank keeps interest rates steady
The Reserve Bank of Australia (RBA) has kept the official cash interest rate unchanged at 3.60%. The announcement, which was consistent with market expectations, came at the end of the traditional two-day bi-monthly meeting of the RBA’s Monetary Policy Board. This was the second time in three months that the central bank had kept rates on hold, having cut them from 3.85% in August. The market had been factoring in a 25 basis point reduction before an unexpectedly high inflation figure last week. However, according to the ASX's RBA Rate Tracker, the odds for a 25 basis point cut tumbled to just 7% as of 3 Novermber, down from 62% a week earlier. In a statement following the unanimous decision, the Board said although financial conditions had eased since the beginning of the year, it would take some time to see the full effects of earlier cash rate reductions. “Given this, and the recent evidence of more persistent inflation, the Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve,” the central bank said in the statement. “The Board remains alert to the heightened level of uncertainty about the outlook in both directions.” The Board said although trimme