A View to 2025: Enough With the Central Bank Hawks and Doves
Interest-rate cuts will be a feature, including at institutions that resisted easing in 2024. But mind the nuances.
The coming 12 months are likely to be more tricky for global interest rates.
Photographer: Win McNamee/Getty Images
Delivering the first cuts in interest rates since the early days of the pandemic was the easy part. The coming year is likely to be rich in nuance: Inflation won't scale the heights of 2022, but officials are skeptical it will return to the ultra-low levels that prevailed before the pandemic. That means borrowing costs will retreat in most economies, though not aggressively, and without many declarations of victory.
For the authorities that have yet to trim, such as the reserve banks in Australia and India, watch for a reduction in the next few months. They can still keep policy restrictive — an ill-defined region that holds the economy back — and bring rates down a little. China, wrestling with a dour outlook and the specter of deflation, has been cautiously easing for a while. The risk is that Beijing does too little rather than too much.