Big central banks signal rate-cut cycle is ending

Central banks in big economies are signalling a change of stance as the Bank of Japan raised interest rates to a 30-year high on Friday.

The Swiss National Bank left its policy interest rate unchanged at 0% on December 11, the lowest among developed-market central banks.

The Bank of Canada held its key rate at 2.25% last week, after 225 basis points of easing this cycle. Governor Tiff Macklem said the economy was proving resilient to US trade measures.

The European Central Bank has been firmly on hold at 2% since June and its latest pause on Thursday also came with upgrades to growth and inflation forecasts.

Meanwhile, the Federal Reserve cut rates on December 10, in a divided vote, then hinted at a pause. Fed policymakers predict just one 25 bps cut in 2026, setting them up for potential clashes with President Donald Trump, who wants more easing.

Bank of England rate-setters voted narrowly for a quarter-point cut to 3.75% on Thursday and Governor Andrew Bailey warned future easing was a close call.

The Bank of Japan raised rates to 0.75% on Friday and upgraded its growth and inflation forecasts.