Central bank scanner: Central banks strike a tentative pose

European Central Bank (ECB):

• Recent Action (October 30): No change in the policy rate. Better than expected GDP growth in the third quarter with annual inflation near the ECB’s target puts the central bank in a sweet spot.
• Upcoming (December 18): No further rate cuts are forecast. The ECB maintains a “data dependent” position; barring unexpected changes to trade and inflation, the cutting cycle has likely come to an end.

Federal Reserve (Fed):

• Recent Action (October 29): The Fed cut 25 basis points, as expected. Two voting members dissented: Stephen Miran, voted for a 50 basis point cut. Jeffrey Schmid opted for no cut. The opinions on the Federal Open Market Committee (FOMC) were more divided than in previous meetings. Upward pressure on prices from tariffs and lack of data due to the shutdown make a cut in December a challenge.
• Upcoming (December 10): No rate cut is forecast at this meeting. The government shutdown ended; despite the resumption of data releases, some data is gone for good. Fed Chair Jay Powell said a cut is “not a foregone conclusion.” Several of his colleagues on the FOMC have publicly aligned with a December hold. A more cautious approach will lead into 2026, when we expect more aggressive monetary easing in the latter half of 2026. Future policy decisions may depend on the composition of the FOMC. The outcome of the Supreme Court case on executive branch powers over the staffing at the Congressionally mandated Fed could affect existing governors, and by extension regional Fed presidents, and therefore could become consequential for monetary policy. Stay tuned.

Bank of Canada (BOC):

• Recent Action (October 29): The BOC cut 25 basis points as expected. The policy rate is now below the midpoint of the BOC’s neutral estimate. In October, the unemployment rate declined to 6.9% from a seven year high of 7.1% reached in September.
• Upcoming (December 10): No rate cut is expected. Growth remains soft due to US trade restrictions and threats. Policy makers noted that if the economy continues to evolve as expected, then there will be no further rate cuts.

Central Bank of Brazil:

• Recent Action (November 5): No change in the policy rate, as expected. Recent inflation data showed a slight cooling, but inflation expectations remain materially above the central bank’s preferences. Policy makers emphasized patience amid a strong labor market and elevated inflation.
• Upcoming (December 10): The CBB is forecast to cut rates within the next few months from the current elevated level of 15%. At the beginning of this cutting cycle, the CBB broke the cardinal rule of cutting too early, triggering reflating, then needing to reverse course and hike rates again. The bank is treading more cautiously on future rate cuts.

Bank of Japan (BOJ):

• Recent Action (October 29): No change in the policy rate, as expected, in a 7-2 vote. The two dissents were in favor of a 25 no hike. The new trade deal with the US pushed the bank’s GDP forecast higher, while the inflation outlook remained unchanged.
• Upcoming (December 19): The next rate hike is expected in early 2026. The BOJ restated its commitment to raising the policy rate if inflation continues to follow the forecasted path. 10-year JGB yields continue to climb—now 60 bps higher than at the start of the year.

Reserve Bank of India (RBI):

• Recent Action (September 30): No change to the policy rate. The governor of the RBI noted a sharp slowdown due to “global uncertainties and tariff related developments”, while policy makers made downward revisions to inflation forecasts.
• Upcoming (December 5): The RBI is forecast to cut rates at least once more through the early part of 2026. Historically low inflation, paired with growth headwinds in the form of shifts in trade and immigration policy from the US underpin the case for more rate cuts. 

Bank of England (BOE):

• Recent Action (November 6): No change in the policy rate, as expected, in a 5-4 vote. The four dissents favored a 25 basis point cut. The swing vote stated that he expects further easing but would like to see durable disinflation. The upshot is monthly inflation cooled to its slowest pace since January.
• Upcoming (December 18): A 25-basis point cut is expected within the next couple of meetings with two to four cuts coming by the end of 2026. The upcoming budget is expected to tighten fiscal policy, which should aid in cooling price pressures. The Monetary Policy Committee remains committed to making “data-driven” decisions, with no set policy path.

Bank of Mexico (Banxico):

• Recent Action (November 6): Banxico cut 25 basis points, as expected. GDP contracted in the third quarter and the central bank increased its forecast of core inflation. Policy makers’ forward guidance indicates a more cautious approach to future cuts.
• Upcoming (December 18): Banxico is forecast to cut several times before the end of 2026. The highest monthly inflation since December 2024 provides cover for no cuts in the near term, although slowing growth and rising unemployment may prompt the bank to act earlier. Trade tensions with the US will be top of mind for Banxico.

Reserve Bank of Australia (RBA):

• Recent Action (November 4): No rate cut, as expected. Policy makers forecast inflation to accelerate in the short term before moderating. That would eventually open the door to more rate cuts.
• Upcoming (December 9): The RBA is forecast to cut 50 basis points by the end of 2026; that is one more cut than its board forecasts. The central bank is more cautious on its rate cut due to its concerns about a rise in inflation in the near term. Inflation needs to decelerate to enable more cuts.

People’s Bank of China (PBOC):

• Recent Action (October 20): No change to the policy rate. Despite slowing growth, the PBOC delayed rate cuts.
• Upcoming (November 19): The PBOC is forecast to gradually cut rates by the end of 2026. Escalating tensions with the US may prompt it to cut rates. Weak loan growth and slowing government borrowing will give policy makers a nudge to lower rates; although they remain concerned that cutting too much could exacerbate overcapacity issues.

Central Bank of Turkey (CBRT):

• Recent Action (October 23): The CBRT cut 100 basis points. Annual inflation has receded from a searing 75.5% in May 2024 to 32.9% in October 2025. That gave the central bank room for a rate cut, although the pace of disinflation has slowed. Policy makers reiterated that interest rates will remain in restrictive territory as they seek to guide inflation to the medium-term 5% target.
• Upcoming (December 11): The CBRT is forecast to cut rates at the year’s final meeting though the size of the cut is in question. The CBRT would like to maintain restrictive policy due to its own upward revisions to the year-end inflation forecast.