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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
Interest rates
Fed cuts rates 25bp to 3yr low, ends balance sheet runoff
The United States Federal Reserve lowered interest rates on Wednesday (Thursday AEDT) to their lowest level in three years, marking its second rate cut in 2025 amid headwinds from the federal government shutdown and President Donald Trump’s tariffs. By a 10-2 vote, the Federal Open Market Committee (FOMC) reduced its benchmark overnight borrowing rate to a target range of 3.75%-4%. The move was widely anticipated by markets, following weeks of weaker economic data and mounting uncertainty. Two committee members dissented. Stephen Miran, appointed by Trump days before the September meeting, once again voted against the majority, arguing the rate cut should have been deeper. Jeffrey Schmid, president of the Kansas City Fed, voted instead to leave rates unchanged. The Fed also announced that it would halt the reduction of its balance sheet, known as quantitative tightening (QT), on 1 December. The program has reduced roughly US$2.3 trillion from the central bank’s holdings of Treasurys and mortgage-backed securities. Instead of reinvesting proceeds from maturing assets, the Fed had been allowing them to roll off its balance sheet each month. However, recent stress in short-term lending markets prompted policym
Interest rates
RBA holds rates at 3.6%; inflation, growth risks linger
The Reserve Bank of Australia (RBA) has left the cash rate unchanged at 3.6%, in line with market expectations, as policymakers weighed a mix of rising domestic demand, sticky inflation, and heightened global uncertainty. At its September meeting, the central bank said inflation had eased considerably but warned it may still surprise on the upside. "Both headline and trimmed mean inflation were within the 2–3 per cent range in the June quarter. Recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected at the time of the August Statement on Monetary Policy," the minutes stated. The decision came after fresh consumer price figures showed headline inflation accelerating to 3% in August, its highest level since July 2024, driven by housing, food, and alcohol costs. Policymakers also pointed to stronger private demand as a key driver of economic momentum: "Data for the June quarter show that private demand is recovering a little more rapidly than expected, taking over from public demand as the driver of growth. In particular, private consumption is picking up as real household incomes rise and measures of financial conditions ease. "The housing market is strength

Interest rates
US Fed cuts interest rates, sees more to come
The United States Federal Reserve (Fed) has cut interest rates by 25 basis points and flagged a further easing of borrowing costs for the rest of this year. In a widely expected decision, the United States central bank reduced the target range for its benchmark lending rate to between 4% and 4.25% as it responded to a weak American jobs market. The decision was supported by all members of the Fed, including all of President Donald Trump's appointees, except the newest member, Stephen Miran, who argued in favour of a 50 basis point reduction. The other 11 voting members of the Federal Open Market Committee (FOMC), which sets rates in the world’s largest economy, supported the quarter-point cut to the Fed funds rate. The Fed Board said economic growth had moderated in the first half of the year, jobs gains had slowed, unemployment had edged up but remained low, and inflation had moved up and remained somewhat elevated. “Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen,” it said in a press release. Projections showed officials expected two more 25 basis point reductions at the rem
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Trump Fed control a 'serious danger', says Lagarde
European Central Bank President Christine Lagarde has warned that President Donald Trump's attempts to undermine Federal Reserve independence would pose a "very serious danger" to the global economy. Speaking to France's Radio Classique on Monday, Lagarde said White House control over U.S. monetary policy would have "very worrying" consequences for economic stability worldwide. "If U.S. monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world," Lagarde said. Last month, Trump attempted to fire Fed Governor Lisa Cook over mortgage fraud allegations. Cook has since filed a federal lawsuit challenging the removal, arguing that Trump lacks legal authority and that the accusations are unsubstantiated. The Fed maintains its current target range of 4.25% to 4.5% due to inflation concerns, particularly around tariff impacts, yet Trump has repeatedly insisted the interest rate cuts to below 1%. Lagarde said it would be "difficult" for Trump to gain control of the Fed's majori
Interest rates
Fed’s Waller backs September cut, sees easing ahead
Federal Reserve Governor Christopher Waller on Thursday strengthened his call for interest rate cuts, signalling that the United States central bank should begin easing next month and continue through early 2026 to shield the economy from a weakening labour market. “Based on what I know today, I would support a 25 basis point cut at the Committee's meeting on September 16 and 17,” Waller told the Economic Club of Miami. "While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is important that the FOMC not wait until such a deterioration is under way and risk falling behind the curve in setting appropriate monetary policy." By his estimates, a neutral policy rate would sit near 3%, well below the current 4.25%-4.50% range. "The time has come to ease monetary policy and move it to a more neutral stance", Waller said, adding he anticipates "additional cuts over the next three to six months, and the pace of rate cuts will be driven by the incoming data". He stressed that while September’s cut should be limited to 25 basis points, that outlook could shift depending on the Labour Department’s August jobs report due next week. Inflation, he
Interest rates
RBA believed more rate cuts were needed - Minutes
The Reserve Bank of Australia (RBA) believed interest rates needed to be further reduced in the coming year to preserve full employment and reduce inflation to the midpoint of its target range. But it was not clear to Members of the RBA’s Monetary Policy Board if the official cash rate should be lowered at a gradual or faster pace, according to the Minutes of the last Board meeting published on Tuesday. The RBA announced a 25 basis point cut in the cash rate to 3.60% after the meeting of the Board held on 11 and 12 August. “Members agreed that – based on what they knew at the time of the meeting – preserving full employment while bringing inflation sustainably back to the midpoint of the target range appeared likely to require some further reduction in the cash rate over the coming year,” the Minutes read. RBA staff were forecasting that the Board would achieve its inflation and full employment objectives over the medium term if the cash rate was reduced at the August meeting, “and somewhat further thereafter”. A tight labour market, a forecast for inflation to be marginally above the target range midpoint in the medium term and recovering private demand were among the conditions that warranted a gradual pace of red