## United States
Recently, the Swiss National Bank and the Bank of Canada implemented 50 basis point rate cuts, while the European Central Bank opted for a quarter-point reduction. These moves indicate a continuing monetary easing cycle expected to extend into the next year. Despite the Reserve Bank of Australia staying on hold, a surprisingly strong employment report diminished expectations of a rate cut in the first quarter of 2025.
In the US, the Consumer Price Index (CPI) aligned with predictions, marking a second straight month of increases, alongside Producer Price Index (PPI) elements, hinting at a rise in the Personal Consumption Expenditures (PCE) deflator. The improvement from the previous year is modest. Unexpectedly, the UK’s economy contracted in October, yet markets remain confident that the Federal Reserve will cut rates at the conclusion of the FOMC meeting on December 18. There is speculation that any rate cut could be “hawkish,” with fewer rate hikes next year than previously anticipated. The Fed acknowledges the economy’s stronger-than-expected health and inflation on an unpredictable path, suggesting patience in policy adjustments.
## Eurozone
Following the ECB’s recent rate cut, the Eurozone is not at the forefront of monetary policy developments this week, with more focus on upcoming central bank meetings. Preliminary December PMI data poses a headline risk but is unlikely to drive exchange rates significantly. The FOMC decisions remain the spotlight. European politics continue to be dynamic, with Le Pen advocating for a slower deficit reduction, potentially stirring tensions with the European Commission. Meanwhile, Macron’s new prime minister appointment and other political maneuvers may affect future economic policies. In technical movements, the euro has shown some volatility but managed to stabilize before the week’s end.
## United Kingdom
The Bank of England’s policy remains data-dependent, with recent reports of the economy unexpectedly contracting in October. Despite this, significant changes in BOE policy are unlikely, maintaining the bank rate at 4.75%. Governor Bailey has hinted at possible rate cuts next year, aligning with market expectations. Sterling experienced fluctuations against the euro and the dollar, influenced by recent GDP data and technical market movements.
## China
China’s efforts to bolster the economy are beginning to show results, as seen in November’s real sector data. However, authorities may still pursue further monetary support through rate cuts and reserve requirement reductions. Speculations about currency depreciation to counter US tariffs persist, but Beijing seems to favor maintaining a stable exchange rate. China’s assertive stance in trade matters and economic policies continues to shape its international relationships and economic outlook.
## Japan
Japan’s economic growth has been turbulent, with recent quarters showing variable performance. The Bank of Japan’s upcoming meeting on December 19 might not lead to a rate hike despite some pressures. Upcoming CPI data could influence future decisions, but current signals point to a hold. Japanese officials’ stance on currency concerns remains unsympathetic due to deeply negative real policy rates, aligning with gradual policy shifts observed in previous turmoil.
## Canada
Canada experienced robust job growth but continued its rate-cutting trajectory with another half-point reduction. Upcoming inflation data is expected to show easing price pressures, with a decline in year-over-year CPI anticipated. Retail sales and foreign investment inflows contribute to the economic narrative, with market movements aligning with these developments. The Canadian dollar reached new lows following the latest rate cut, reflecting the changing economic landscape.
## Australia
Australia’s data, including upcoming PMI and inflation figures, are unlikely to significantly impact expectations for the Reserve Bank of Australia. The RBA maintains a relaxed stance on rate cuts, deemphasizing possible hikes. Following a recent poor GDP report, market odds for a rate cut in April have increased, aligning with broader economic expectations. The Australian dollar has experienced volatility, reacting to domestic economic indicators and market sentiment.
## Mexico
As inflation trends downward, Mexico’s economic momentum appears to be slowing, prompting expectations of a quarter-point rate cut by its central bank on December 19. This anticipated move would mark the fifth cut in the current easing cycle, with continued reductions expected into next year. Other Latin American currencies showed mixed performance against the dollar, with Mexico’s peso maintaining relative stability following recent election-related movements.
