Trump is about to take the stage! Global central banks should also be cautious in cutting interest rates in 2025.

Global central bank governors are expected to further cut interest rates in 2025, but will proceed cautiously and closely monitor the policies of incoming US President Donald Trump. Although almost all major economies are expected to implement monetary easing in the coming year, the pace may slow down. Bloomberg Economics predicts that the total interest rates in developed countries in 2025 will only decrease by 72 basis points, lower than the level in 2024. The change in this indicator indicates that the easing cycle is in progress, with continued concerns about inflation pressures that may still need to dissipate, and the upcoming second era of Trump also bringing many unknown factors. For central bank governors around the world, the next US President is an existence that cannot be ignored. If implemented as advocated by Trump, the threat of trade tariffs may harm economic growth and raise consumer prices in the face of retaliation from other countries. In the United States, the Federal Reserve has shifted its focus to the risk of rising inflation, temporarily suppressing the prospect of significantly easing monetary policy. From the Eurozone to other major countries like the UK, they are prepared to continue lowering borrowing costs to boost economic growth, but there are no signs of rushing to take action. Among the 23 central banks most closely watched, only two may raise interest rates by the end of the year. Japan's rate hike cycle may continue, and Brazilian officials are still determined to take action to curb fiscal-driven inflation. Tom Orlik, Chief Economist of Bloomberg Economics, said, "For central banks on the road to policy normalization, the last mile will not be smooth sailing. The imbalance progress towards 2% inflation, the impact of the incoming Trump administration, and uncertainty about neutral rates all increase the likelihood of unexpected events. Bloomberg Economics expects the average interest rate of developed economy central banks to rise from 3.6% at the end of 2024 to 2.9% at the end of 2025. Sometimes, even a short distance can... Next be difficult to walk." Here are the outlooks for the future monetary policy of some central banks by foreign media: Federal Reserve The current federal funds rate (upper limit) of the Federal Reserve is 4.5%, and Bloomberg Economics predicts it to be 3.75% by the end of 2025. Market expectations for a 25 basis point rate cut before March are in line, and expectations for a rate cut before June are fully consistent, with a close to 70% probability of a second rate cut before the end of the year. In December last year, the Federal Reserve once again cut interest rates by 25 basis points, but the new forecasts show that many policymakers believe it was enough, at least for a few months, and they are pressing the pause button. Policymakers only hint at cutting 50 basis points by 2025. Just a few months ago, there were signs of a looming collapse in the U.S. labor market, and now the Fed's attention has firmly shifted back to inflation, which seems to have stalled above the 2% target. Federal Reserve Chairman Jerome Powell has made it clear that officials must see new progress in this area before taking further action. Powell expressed fairly confidence that monetary policy will remain a meaningful restrictive policy and inflation will continue to decline. But based on new inflation forecasts and forecasts for neutral rates (policies that will neither help nor harm economic growth), several Fed officials seem more skeptical. Entering 2025, this has created a highly tense atmosphere within the committee, and another source of pressure is also looming: Donald Trump. The president-elect favors low interest rates and surging stock markets, and after the Fed's recent decision, both markets have been hit. He may, as in the past, be further angered by the gap between U.S. and Eurozone benchmark rates, a gap that is expected to widen in 2025. Bloomberg Economics analyst Anna Wong said, "The Federal Open Market Committee (FOMC) took a hawkish stance at its last meeting in 2024, disappointing expectations that it would cut rates by 50 basis points in 2025. Due to seasonal factors, inflation data in early 2025 may remain robust. Even so, we believe that as the unemployment rate continues to rise, the Fed will eventually have to cut rates by 75 basis points in 2025 and 2026 respectively, with the unemployment rate reaching 4.7% and 5.0% by the end of 2025." European Central Bank The European Central Bank's deposit rate is 3%, and Bloomberg Economics predicts it to reach 2% by the end of 2025. Traders expect a 25 basis point rate cut this month, followed by three more cuts by the end of June, with a 25% chance of five rate cuts by the end of the year. After a slow start, the European Central Bank has begun steady rate cuts, with a consecutive 25 basis point rate cut by mid-year to bring the deposit rate to 2%. Although some officials have raised the option of taking more aggressive action, most believe there is no need to accelerate the pace. Although overall inflation is expected to stabilize at the ECB's target level of 2% in 2025, price increases for services are still close to twice this level, heightening concerns about wages, which in turn hinder policymakers from making alerts. With support from a rebound in private spending, economic growth is expected to pick up after experiencing winter stagnation. David Powell, analyst at Bloomberg Economics, said, "Signs of slowing GDP growth in Europe have emerged, and we expect that as investment decisions are put on hold, tariff threats will put pressure on economic activity. In early 2025, overall inflation will be below the 2% target, wage growth is slowing, and profit margins have stopped expanding. Restrictive policies have become increasingly difficult to justify, and we expect consecutive rate cuts by March, followed by quarterly rate cuts until the deposit rate reaches 2%. This is our estimate of neutrality." Bank of Japan The Bank of Japan's target rate (upper limit) is 0.25%, and Bloomberg Economics predicts it to reach 1%. The currency market is betting on gradual policy tightening, with an expected 25 basis point rate hike by May and another rate hike before the end of the year.The Governor of the Bank of Japan, Haruhiko Kuroda, faces a difficult decision on the timing of the next interest rate hike. Inflation has been maintained at or above the Bank of Japan's target of 2% for over two and a half years. With economic growth, this seems like a long enough period to raise interest rates from lower levels. A rate hike would also help support the struggling yen. However, the January meeting will take place four days after Trump's inauguration, with Kuroda also listing Trump's policies as one of the major uncertainties to be cautious about. By waiting until March, Kuroda will have a clearer understanding of the US economy and domestic wage trends. This will also give Prime Minister Shinzo Abe's minority government more time to pass the budget. Ultimately, the yen could be a decisive factor. Bloomberg Economics analyst Taro Kimura commented, "We expect Kuroda to lay the groundwork for a rate hike in January at the December meeting. However, his cautious stance shows that the Bank of Japan wants to retain some flexibility to act when market and political conditions are favourable. We still believe that the Bank of Japan will raise rates in January, as inflation seems more likely to stay near the Bank of Japan's 2% target, and the yen's sharp decline will also increase upside risks."