Spectre of Trump spurs a final round of rate moves
Central banks on four continents will make a final flurry of changes to borrowing costs in the coming week, before Donald Trump's return to the White House raises the prospect of global trade turmoil. By the time policymakers from Australia, Canada, Brazil and the euro zone convene for their first scheduled meetings of 2025, the US president-elect will have taken office, and a potential wave of tariffs could be closer to reality.
The impending change in America will help cement a particularly unsynchronized phase in monetary policy, as various economies contend with different inflation risks.
Australian policymakers are likely to keep interest rates on hold again on Tuesday, while their Canadian peers, wary of the disruption to trade that might quickly materialize from over the border, may deliver another reduction of as much as half a percentage point the following day.
In Brazil, whose currency was hit in the past week by Trump's threat to impose tariffs on the BRICS bloc, officials are poised to jack up borrowing costs to quell surging inflation pressures.
And for euro-zone officials setting rates on Thursday, the focus is shifting rapidly from monitoring lingering consumer-price risks to worrying about the fallout from the potential hit to global commerce. ECB President Christine Lagarde and her colleagues are set to cut by a quarter point — as are the Swiss, whose currency attracts speculators at times of geopolitical stress.
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