In 2025, many central banks around the world are planning to lower borrowing costs. However, they will do this carefully and will pay close attention to how the new US President, Donald Trump, will affect economies globally.
Most major countries are expected to ease their monetary policies, but these changes won’t happen quickly. Research suggests that the average interest rates in advanced economies will drop by about 0.72% in 2025, which is less than the drop in 2024.
Central banks are worried about inflation and moving slowly as they adjust rates. The Federal Reserve in the US is particularly focused on preventing inflation from rising again. Many central banks in Europe plan to lower rates to help their economies grow but are not in a rush to do so.
As for emerging markets, like China and India, they are also watching how trade tensions and inflation will affect their economies. China is expected to adopt a “moderately loose” monetary policy to help its economy, while India might lower rates to support growth.
Overall, although there will be rate cuts, the changes will happen slowly, as central banks want to avoid surprising their economies with rapid adjustments.
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