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The Fed delivered one more quarter-point cut in December, but new forecasts showed many policymakers had seen enough – at least for a couple months — and are pushing the pause button. Policymakers signaled just a half-percentage point of reductions for 2025.

Just a few months after the US labor market appeared dangerously close to tipping over, the Fed’s focus is now firmly back on inflation, which appears to have stalled above their 2% target. Chair Jerome Powell made clear officials will have to see renewed progress on that front before they move again.

Powell expressed a fair amount of confidence that monetary policy remains meaningfully restrictive and inflation will continue moving down. But based on new inflation forecasts and projections of the so-called neutral rate – where policy is neither helping nor hurting the economy – many of his colleagues appear more skeptical.

That sets up a heightened level of tension on the committee heading into 2025, with one other source of stress looming in the background: Donald Trump.

The president-elect likes low rates and soaring stock markets, each of which took a hit after the recent Fed decision. He may be further provoked, as he has been in the past, by the gap between US and euro-zone benchmark rates, which is expected to widen in 2025.

What Bloomberg Economics Says:

“The FOMC struck a hawkish posture at the last meeting of 2024, disappointing market expectations with only 50 basis points of anticipated 2025 cuts. Justifying that stance, inflation data early in 2025 will likely be solid due to residual seasonality. Even so, we think the Fed ultimately will have to cut by 75 bps in each of 2025 and 2026, as the unemployment rate continues to climb, ending 2025 at 4.7% and 5.0% in 2026.”

—Anna Wong

Fed Sees Only 50 Basis Points of Cuts in 2025 and 2026

European Central Bank

• Current deposit rate: 3%

• Bloomberg Economics forecast for end of 2025: 2%

• Market pricing: Traders expect a 25-basis-point cut this month followed by three more by the end of June and a 25% chance of a fifth by the end of the year.

After a slow start, the ECB has embarked on a steady path of rate cuts that will likely take the deposit rate to 2% by the middle of this year in a series of back-to-back quarter-point steps. While the option of larger moves has been brought up by some officials, the majority sees no urgency to increase the pace.

While headline inflation is expected to settle at the ECB’s 2% target in the course of 2025, services prices are still rising at nearly twice that rate, adding to lingering concerns over wages that have prevented policymakers from sounding the all clear. Economic growth is seen picking up after a winter lull, bolstered by a rebound in private spending.

What Bloomberg Economics Says:

“Signs have emerged of a slowdown in GDP growth and we expect the threat of tariffs to weigh on activity as investment decisions are put on hold. Headline inflation will move below the 2% target in early 2025, wage growth is slowing and profit margins have stopped expanding. Restrictive policy has become hard to justify and we expect back-to-back rate cuts until March, followed by quarterly moves, until the deposit rate hits 2%. That’s our estimate of neutral.”

—David Powell

Bank of Japan

• Target rate (upper bound): 0.25%

• Bloomberg Economics forecast for end of 2025: 1%

• Market pricing: Money markets are betting on a gradual pace of tightening, pricing a quarter-point hike by May followed by another toward year-end.

Bank of Japan Governor Kazuo Ueda faces a tough decision on the timing of his next rate hike.

Inflation has continued at or above the BOJ’s 2% target for more than 2 1/2 years. With the economy growing, that seems a long enough stretch to raise rates from a very low level. A hike would also help support the embattled yen.

But the January meeting comes just four days after Trump’s inauguration. Ueda has cited his policies among key uncertainties warranting caution. Waiting until March would give Ueda more clarity on the US economy and on the domestic wage trend. It would also give Prime Minister Shigeru Ishiba’s minority government more time to pass a budget.

Ultimately the yen may serve as the deciding factor.

What Bloomberg Economics Says:

“We expected Ueda to lay the groundwork for a rate hike in January at the December meeting. Turns out, he didn’t — his cautious approach suggests the BOJ wants to keep some leeway to move when market and political conditions are conducive. We still have high conviction that it will hike rates in January. The reason — inflation looks increasingly likely to stay around the BOJ’s 2% target. The yen’s tumble will also add upside risks.”

—Taro Kimura

Bank of England

• Current bank rate: 4.75%

• Bloomberg Economics forecast for end of 2025: 3.75%

• Market pricing: Money market wagers favor policymakers to deliver a quarter-point cut in February and fully price a second reduction by November, with a 30% chance of a third in December.

The BOE signaled it plans to stick with its once-a-quarter pace to rate cuts for now, even as domestic price pressures and uncertainty abroad build. Markets see a third reduction of the cycle as more likely than not in February, when the UK central bank will also deliver new forecasts and their annual stocktake of the economy’s growth capacity.

Governor Andrew Bailey doubled down on the need for “gradual” cuts at the December meeting, largely dismissing a surprise jump in wage growth and pickup in inflation in the days before.

The outlook for rates beyond February is likely to depend on the fallout from the Labour government’s first budget and any impact from the resurgence of global trade tensions.

What Bloomberg Economics Says:

“The BOE has indicated it intends to lower borrowing costs gradually. We expect it to ease at a quarterly pace in 2025 with rates ending the year at 3.75%. That would bring them to a more neutral level as the BOE balances above target inflation with a labor market that is tight but cooling. We think there’s limited room to cut rates much further without stoking inflationary pressure.”

—Dan Hanson

Bank of Canada

• Current overnight lending rate: 3.25%

• Bloomberg Economics forecast for end of 2025: 2.5%

• Market pricing: Markets anticipate a 25-basis-point reduction later this month with a second cut fully priced by June and favor a third decrease in the second half of the year.

After leading the Group of Seven central banks into easing monetary policy and delivering two back-to-back half percentage point cuts, the Bank of Canada is now eyeing a more gradual pace of interest rate reductions. With inflation expected to hover around the central bank’s 2% target over the year and borrowing costs normalized from restrictive territory, Governor Tiff Macklem can now focus on fine tuning policy to engineer a soft landing.

Despite rapid population increases, Canada’s economic growth remains sluggish, and while the central bank has largely succeeded at bringing price pressures to heel without a major correction, concerns are mounting over the potential for a trade battle with the country’s largest trading partner. Trump has threatened to place 25% tariffs on goods imported from the northern nation, which Macklem has called “a major new uncertainty” that’s already likely hurting the country’s weakened business investment.

What Bloomberg Economics Says:

“Temporary fiscal stimulus measures will likely support growth in 1Q, encouraging a slower rate-cut pace. Headline inflation is already at the 2.0% target, and unemployment is likely to exceed 7.0% around mid-year. Mounting trade tensions with the US, and October 2025 elections, add uncertainty. Though the Bank of Canada is approaching a neutral policy stance, we expect the Governing Council to lower its overnight-rate target further — reaching 2.5% in 2Q — before an extended pause.”

—Stuart Paul

Bank of Canada Rushing Toward Neutral

BRICS CENTRAL BANKS

People’s Bank of China

• Current 7-day reverse repo rate: 1.5%

• Bloomberg Economics forecast for end of 2025: 1.2%

China’s top leaders pledged to adopt a “moderately loose” monetary policy in 2025, in the first shift of stance after 14 years of upholding a “prudent” policy.

Greater monetary stimulus would help the economy counter headwinds from a looming trade war with the US. At a key meeting in December, officials made an unusually direct vow to deliver cuts to rates and the reserve requirement ratio for banks, which would lower the amount of cash they must hold in reserves.

The PBOC’s space for easing policy is still constrained though, as it needs to prevent a rapid depreciation of the yuan. Commercial banks’ narrowing profit margin is another factor that may limit the PBOC’s room for maneuver.

What Bloomberg Economics Says:

“As stated by the Politburo at early December, the PBOC shifted to a ‘moderately loose’ monetary policy — a stance once employed over 2008-2010, suggesting there’s stronger easing to come after the unprecedented moves in late September. For 2025, we see 100 bps of RRR cuts and 30 bps of rate cuts.”

—David Qu

Reserve Bank of India

• Current RBI repurchase rate: 6.5%

• Bloomberg Economics forecast for end of 2025: 5%

In his last monetary policy as RBI governor in December, Shaktikanta Das kept the policy rate unchanged for the 11th straight review but eased banking system liquidity by lowering the cash reserve ratio by half a point.

The RBI cut its growth projections for the economy for the year through March sharply from 7.2% to 6.6%, accounting for an unexpected slowdown in the July-September quarter. However, concerns about slowing growth were also packaged with warnings about accelerating inflation, which the central bank raised to 4.8% average for the year from its earlier view of 4.5%.

Das’s successor Sanjay Malhotra, though, made it clear that the RBI has a “huge responsibility” to ensure India’s world-beating growth rate continues, and that would be his priority.

With India’s growth slowing and a new governor in place, economists are almost certain that rates will start moderating from February when the six-member monetary policy committee meets next. The fresh debate now is how deep the cuts could be in the cycle.

What Bloomberg Economics Says:

“The RBI’s restrictive policy is holding back the economy, with the repo rate above its estimated nominal neutral rate (6.5% vs around 5.4%-5.9%). The central bank needs to prioritize growth. It has space, with inflation having fallen back into its 2%-6% tolerance range and set to slow further. We expect the new governor to start an easing cycle in February with a big rate cut of 50 bps.”

—Abhishek Gupta

Deep RBI Cuts Needed in 2025 to Revive Growth

Central Bank of Brazil

• Current Selic target rate: 12.25%

• Bloomberg Economics forecast for end of 2025: 13.5%

Brazil’s central bank lifted its rate by a full percentage point in December and signaled two more hikes of the same size, moves that would raise borrowing costs to 14.25% by March.

Gabriel Galipolo, who took over as central bank governor in January, has warned there’s a “high bar” for any change to that guidance. Most analysts are ultimately betting on a more extended hiking cycle.

Investors have dumped local assets as they question President Luiz Inacio Lula da Silva’s commitment to rein in public spending. Aside from fiscal policy, central bankers are also concerned about a depreciated currency, a stronger-than-expected economy and inflation forecasts that are well above the 3% target.

What Bloomberg Economics Says:

“Galípolo must convince investors he’s serious about hitting the 3% inflation target. It won’t be easy. The BCB has to tighten monetary policy further and clearly communicate its strategy. Galípolo’s success will largely depend on fiscal policy in 2025. If Lula announces additional measures – as we expect – the BCB may have room to cut rates late in the year.”

—Adriana Dupita

Bank of Russia

• Current key rate: 21%

• Bloomberg Economics forecast for end of 2025: 16%

The Bank of Russia enters 2025 with intrigue surrounding its rate policy after it held at a record-high 21% in December despite accelerating inflation that left most analysts expecting a big hike. The decision followed rare public criticism of the bank’s rate increases from Russian politicians and businesses.

Governor Elvira Nabiullina justified the pause by saying monetary conditions had tightened more than anticipated, and said the bank would likely choose between another hold or an increase at its next rate meeting on Feb. 14.

There’s no sign of any dovish turn, though, with persistent inflationary pressures linked to Russia’s war in Ukraine prompting the bank to postpone reaching its 4% target from this year to 2026.

What Bloomberg Economics Says:

“Russia’s hiking cycle likely peaked at 21% in 2024. The central bank’s shift to easing will probably be slow in 2025 as it will be wary of missing its 4% inflation target again and seeing its credibility further diminished. Recent upside inflation surprises and ruble weakness mean price growth will remain elevated in 1Q25. Still, we expect the central bank to start reducing the policy rate between April and July 2025 to end the year at 16%.”

—Alexander Isakov

South African Reserve Bank

• Current repo average rate: 7.75%

• Bloomberg Economics forecast for end of 2025: 7.25%

Inflation has remained below the mid-point of the South African Reserve Bank’s 3%-6% target range since August, giving policymakers scope to continue lowering borrowing costs in 2025.

The bank has eased rates by a cumulative 50 basis points since September, after holding the benchmark rate at 8.25% for more than a year.

Governor Lesetja Kganyago acknowledges that pricing pressures have eased, but warns that Trump’s election may create upside risks.

The SARB will take decisions on a meeting-by-meeting basis and won’t pre-commit to any specific rate path, he says. The central bank’s modeling shows the key rate stabilizing at slightly higher than 7% by the end of 2025. Inflation is seen averaging 4% in 2025.

What Bloomberg Economics Says:

“Lower-than-anticipated inflation gives the South African Reserve Bank room to cut rates by 50 basis points to 7.25% by March, close to the neutral rate. It will then pause. The narrowing of the output gap to zero over the central bank’s forecast period through 2027 supports halting cuts soon. In 1Q25, inflation may be sticky in the lower band of the SARB’s 3%-6% target. It may then rise to the 4.5% mid-point by 4Q25 and stay there through 2026.”

—Yvonne Mhango

MINT CENTRAL BANKS

Banco de Mexico

• Current overnight rate: 10%

• Bloomberg Economics forecast for end of 2025: 8.5%

Mexico’s central bank is expected to continue lowering borrowing costs at its next decision in February, following four straight quarter-point cuts in the closing months of 2024. Policymakers have said they could consider a larger adjustment in upcoming meetings.

Weaker activity is seen contributing to the local inflation slowdown, with Banco de Mexico projecting growth of 1.2% in 2025, down from 1.8% in 2024. Trump’s threat to impose a 25% tariff on goods from Mexico could create greater headwinds for the economy.

Going forward, President Claudia Sheinbaum is expected to announce a replacement for Banxico board member Irene Espinosa, whose term ended in December.

What Bloomberg Economics Says:

“Price pressures from supply shocks and labor costs are abating, and there’s evidence of activity and demand losing momentum. That points to further disinflation and additional monetary easing in 2025. But the central bank’s room for maneuver is limited by persistent inflation expectations and pressure on the peso stemming from concerns about government policies, global financial conditions, and Trump’s trade and immigration plans. We expect Banxico to maintain a gradual easing pace, cutting rates 150 basis points in 2025.”

—Felipe Hernandez

Mexico Monetary Policy Interest Rate Outlook

Bank Indonesia

• Current 7-day reverse repo rate: 6%

• Bloomberg Economics forecast for end of 2025: 5.5%

Bank Indonesia will likely embark on fewer and slower rate cuts this year with the rupiah under persistent pressure from global volatility. As one of few central banks with currency stability as its key mandate, Governor Perry Warjiyo says the rupiah will be its main priority even though low inflation and slowing economic growth give it ample room to ease.

The central bank is also set to buy over $9 billion in bonds to help manage yields as some pandemic-era government debt matures this year.

With BI already the biggest holder of the country’s outstanding bonds, the purchases could further sap liquidity from the market. An ongoing graft probe into the central bank’s use of CSR funds will be an unwelcome distraction for investors.

What Bloomberg Economics Says:

“Bank Indonesia is likely to leave rates unchanged in the first and second quarters, allowing the rate differential with the US to tip more in its favor as the Fed cuts further. This will shore up the rupiah, which remains the central bank’s priority. Capital inflows will be vulnerable to worries about harsh tariffs coming from Trump. Another potential strain for the currency is that sticky US inflation keeps US rates higher for longer.”

—Tamara Henderson

Central Bank of Turkey

• Current 1-week repo rate: 47.5%

• Bloomberg Economics forecast for end of 2025: 25%

Turkey’s central bank cut its main borrowing costs for the first time since February 2023 in December but remained cautious about further easing, saying it’ll make decisions based on incoming data. The institution also reduced the number of policy-setting meetings in 2025 to eight, from 12, prompting expectations of bigger-sized cuts at less frequency.

Annual inflation slowed to around 44% at the end of 2024, still nine times officials’ target. Policymakers expect the relatively prudent minimum-wage raise of 30% and other fiscal measures are will help with the efforts to slow prices to 21% at the end of 2025.

What Bloomberg Economics Says:

“The CBRT will likely follow a larger-than-expected kick off to its easing cycle in December with further cuts in 1Q25, working toward a 25% end-2025 policy rate. Risks to the outlook are balanced. President Recep Tayyip Erdogan’s comments favoring lower rates suggest faster cuts ahead while an upside threat to an already elevated inflation outlook keeps risks alive for a higher rates path.”

—Selva Bahar Baziki

Central Bank of Nigeria

• Current central bank rate: 27.5%

• Bloomberg Economics forecast for end of 2025: 24%

Nigerian monetary policymakers are set to extend an unprecedented tightening cycle this quarter to cool inflation that’s still heating up and deliver the price stability Governor Olayemi Cardoso sees as a “foremost priority.”

Cardoso told a gathering of the country’s bankers at the end of 2024 that “given that the full effects of monetary policy typically take six to nine months to impact the consumer sector,” the central bank expects inflation to start easing this year, which would allow it to adjust rates lower “in the near future.”

Economists surveyed by Bloomberg expect that could be in the second quarter.

What Bloomberg Economics Says:

“The central bank’s smaller-than-expected rate hike in November suggests policymakers expect inflation to moderate soon. While we agree that inflation will slow in 2025, we think the pace will be gradual. The central bank will likely stay the course and raise rates by a further 50 basis points in the first half of 2025. Smaller hikes mean the cycle may be drawn out because restoring real rates — getting yields to converge with inflation — will take longer.”

—Yvonne Mhango

OTHER G-20 CENTRAL BANKS

Bank of Korea

• Current base rate: 3%

• Bloomberg Economics forecast for end of 2025: 2%

The Bank of Korea faces more threats to its effort to safeguard economic growth after President Yoon Suk Yeol briefly declared martial law in early December, sending the nation into political turmoil. Governor Rhee Chang-yong has since pledged “unlimited liquidity” along with the government, but he has dismissed the idea of a rate cut just to cushion the impact from the event.

The BOK lowered borrowing costs in November in a surprise back-to-back move as it sought to brace the trade-reliant economy against potential tariffs to be imposed by Trump. It will meet again in mid-January, likely reassessing the state of private consumption and foreign exchange markets.

What Bloomberg Economics Says:

“Downside risks are mounting for South Korea’s economy, from the political chaos sparked by President Yoon’s martial law declaration to the Jeju Air crash. We therefore expect the BOK to keep easing policy into 2025. But it is likely to tread carefully to avoid putting too much downward pressure on the already weakening won. We see the BOK delivering four 25-basis-point cuts this year, taking the base rate down to 2%.”

—Hyosung Kwon

Reserve Bank of Australia

• Current cash rate target: 4.35%

• Bloomberg Economics forecast for end of 2025: 3.35%

The New Year will likely mark the start of the RBA’s long-awaited easing cycle after Governor Michele Bullock made a surprising dovish tilt in December.

Many economists including those at Goldman Sachs believe a cut can come as soon as February while others including Westpac have picked May. The RBA has left its key rate at a 13-year high of 4.35% since November 2023 citing sticky inflation.

Before its next meeting on Feb. 17-18, the RBA will have seen a key fourth-quarter inflation reading; a faster than forecast decline in prices could finally force its hand.

Irrespective of when the cuts begin, any easing cycle is expected to be short and shallow as consumption is expected to lift in the run-up to an election due by May and the jobs market remains sturdy.

What Bloomberg Economics Says:

“The RBA’s dovish tilt at the end of 2024 paves the way for it to start cutting rates in early 2025. How soon and how deep it goes will be determined by the strength of the consumer – a downturn in migration will put a heavy downdraft on aggregate spending. A new monetary policy board, and a federal election in 1H25, will muddy the waters a little but we expect a cut in February, with 100 basis points of easing in 2025..”

—James McIntyre

Central Bank of Argentina

• Current key rate: 32%

• Bloomberg Economics forecast for end of 2025: 55%

Argentina’s central bank lowered its benchmark rate by 300 basis points in December and more reductions are possible going into early 2025. A survey of economists published on the same day as that move showed monthly inflation is seen under 3% through May 2025 — well below the double-digit increases recorded at the start of 2024.

Still, at some point this year, President Javier Milei has promised to scrap the litany of controls on the peso. A freer economy would consequently require high rates to guard against a currency run. To get there, Argentina will also need to beef up its scant foreign reserves, likely through a new program with the International Monetary Fund.

What Bloomberg Economics Says:

“An exit from currency controls and a potential IMF deal will shape Argentina’s monetary and FX policies in 2025. We expect Milei to lift controls and move to a dirty peso float early this year. But if the IMF gives its blessing, the central bank could maintain controls until late 2025 and slow the peso crawl — or lift them early but tightly manage the currency. Either approach would require higher real interest rates.”

—Adriana Dupita

G-10 CURRENCIES AND EAST EUROPE ECONOMIES

Swiss National Bank

• Current policy rate: 0.5%

• Bloomberg Economics forecast for end of 2025: 0.25%

The SNB recently doubled down on easing, delivering the largest cut of the current cycle in December and taking borrowing costs down to one of the world’s lowest levels. This could be a prelude toward a return of negative rates in Switzerland over the course of 2025.

Policymakers around new President Martin Schlegel are fighting the strong franc, which suppresses price pressures by making imported goods cheaper. At 0.7% and predicted to fall further, it runs the risk of undershooting the central bank’s 0-2% target range. While officials have said that the policy rate is their main tool, the currency’s strength could also increase the likelihood of foreign-exchange interventions, a policy the SNB has previously embraced.

What Bloomberg Economics Says:

“The SNB surprised again by dropping rates by 50 basis points in December 2024, highlighting the central bank’s concerns about downside risks to inflation and economic activity. This jumbo cut substantially reduces the policy space available, but further easing will likely still be needed to limit franc appreciation as other central banks continue to lower rates. We forecast the SNB will deliver a final cut in March, taking the rate to 0.25%, with risks skewed toward further easing.”

—Maeva Cousin

Sveriges Riksbank

• Current policy rate: 2.5%

• Bloomberg Economics forecast for end of 2025: 2%

Sweden’s central bank is poised to be one of the first in the developed world to wrap up its easing campaign this year. Officials at the world’s oldest monetary authority signaled one more quarter-point move in the first half of 2025, to 2.25%, at their last meeting.

With inflation consistently below its 2% target, the Riksbank has been preoccupied with reducing constriction for the largest Nordic economy that’s been largely stagnant since late 2022. Signs of a sustained recovery still remain few and far between, even as purchasing power is on the rise and the center-right government has pledged stronger fiscal stimulus.

What Bloomberg Economics Says:

“The Riksbank has signaled one final rate cut in 2025. We disagree. With the economy failing to recover from 2023’s recession and risks tilted toward a further delay in the revival of domestic demand, we think policymakers will be forced to cut twice in early 2025. That will take the policy rate to a terminal rate of 2% by mid-year.”

—Selva Bahar Baziki

Norges Bank

• Current deposit rate: 4.5%

• Central bank guidance for end of 2025: 3.75%

Norway’s central bank is set to begin lowering borrowing costs from a 16-year high of 4.5% in March, according to its latest outlook. Inflation slowed faster than Norges Bank’ officials expected for most of last year, while still remaining among the fastest in the G-10 space of major currency holders.

Easing has mainly been postponed by the weakness of krone that’s threatened to revive imported price growth, while the energy-rich economy has also been bolstered by budget stimulus and robust petroleum-linked sectors, weathering the dent from high credit costs. Governor Ida Wolden Bache and other rate-setters project three quarter-point key rate cuts through 2025 to 3.75%, one less move than expected by analysts according to estimates compiled by Bloomberg.

Reserve Bank of New Zealand

• Current cash rate: 4.25%

• Bloomberg Economics forecast for end of 2025: 2.5%

After starting its easing cycle in August, the RBNZ became one of the most aggressive rate cutters of 2024, slashing its Official Cash Rate by 125 basis points in the space of three months. That included two 50-point moves, and Governor Adrian Orr said a third is likely when policymakers next meet on Feb. 19. After that, the central bank’s forecasts suggest it will slow down and trim the cash rate to 3.5% by the end of the year.

That outlook may need to be reassessed after data showed the economy sank into a much deeper-than-expected recession in the second and third quarters of 2024. Investors are now betting the RBNZ will cut rates to a less restrictive level of about 3%.

What Bloomberg Economics Says:

“The RBNZ will need to cut rates by more than its latest projections currently suggest. The economy is in recession, monthly price indicators suggest downside risk to the RBNZ’s inflation outlook, and the labor market looks to be weakening faster than expected. We see the RBNZ delivering a 50-basis-point rate cut in February, with further easing taking the official cash rate to 2.50% – 40 basis points below their estimate of neutral – in 2H25.”

—James McIntyre

National Bank of Poland

• Current cash rate: 5.75%

• Bloomberg Economics forecast for end of 2025: 5%

Prospects for Poland’s rate cuts have become unclear after the central bank Governor Adam Glapinski took markets by surprise in December, saying that monetary easing was likely to be delayed into 2026 from early 2025. According to the governor, the government’s decision to only keep power prices cap until September may boost inflation again later in 2025.

Some policymakers distanced themselves from that guidance and confirmed they expect rate cuts to be discussed in March. Others said that the comments by Glapinski — an ally of previously ruling populists — were politically-motivated ahead of the presidential election in mid-2025. A front-runner in the ballot called on the central bank chief to stop interfering with the economy.

Glapinski has repeatedly rejected accusations of his political partisanship and other alleged wrongdoing.

What Bloomberg Economics Says:

“Poland’s central bank is likely to refrain from cuts and hold its reference rate at 5.75% until at least 1Q25 as core inflation and wage growth remain elevated. Throughout 2024, the NBP has consistently been more hawkish than consensus expectations and will probably retain that bias in 1Q25. Looking beyond that though, we expect it to deliver 75 basis points of cuts over 2025, bringing the reference rate to 5.0% by year end.”

—Alexander Isakov

Czech National Bank

• Current cash rate: 4%

• Median economist forecast for end of 2025: 3%

The Czech central bank halted its year-long easing cycle in December, after bringing the benchmark rate down 3 percentage points, as policymakers worried about sticky services inflation, wage growth and budget deficit.

While economists expect inflation to ease further and allow rates to fall to 3% by the end of 2025, money market prices indicate investors are betting on cuts totaling only around 50 basis points over the next 12 months. Governor Ales Michl signaled there is room for more easing, saying the central bank will again consider holding rates or cutting them at the next meeting in February.

--With assistance from Mike Cohen, Monique Vanek, Agnieszka Barteczko, Michael S. Arnold, Nduka Orjinmo, Ott Ummelas, Peter Laca, Paul Richardson, Sam Kim, Swati Pandey, Erik Hertzberg, Tom Rees, Tony Halpin, Toru Fujioka, Anooja Debnath, Vince Golle, Yujing Liu, Anup Roy, Beril Akman, Bastian Benrath-Wright, Christopher Condon, James Hirai, Claire Jiao, Emma Ross-Thomas, Jana Randow, Manuela Tobias, Maria Eloisa Capurro, Matthew Brockett, Matthew Malinowski and Maya Averbuch.

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