January 29, 2025

Canada: 25bp Rate Cut To 3.0% (Consensus 3.0%) in Jan-25
- The Bank of Canada reduced its policy rate by 25 basis points to 3% and announced the end of quantitative tightening, aligning with expectations, as inflation remains stable around 2%.
- The economic outlook is clouded by external risks, particularly the threat of new US tariffs. Meanwhile, domestic conditions show a soft labour market, weak business investment, and moderate GDP growth projections of 1.8% in 2025 and 2026.
- The Bank has signalled a cautious, data-dependent approach to future rate adjustments, monitoring inflation risks, trade policy developments, and the effectiveness of past monetary easing.
January 28, 2025

Chile: Policy Rate Held At 5.0% (Consensus 5.0%) in Jan-25
- The Central Bank of Chile held its policy rate at 5% in response to rising inflation risks, reinforcing a cautious stance despite economic activity exceeding expectations in late 2024.
- Global uncertainty, higher US long-term interest rates, and a stronger dollar have weighed on financial conditions, while China's economic acceleration has provided a modest offset to external risks.
- Inflationary pressures, driven by peso depreciation, rising labour costs, and energy prices, have led to a divergence in inflation expectations, suggesting that future rate cuts will be more measured and data-dependent.
January 24, 2025

Japan: 25bp Rate Hike To 0.5% (Consensus 0.5%) in Jan-25
- The BoJ raised its policy rate by 25 basis points to 0.5%, consistent with market expectations and reflecting a gradual recalibration of monetary policy as inflationary pressures stabilise near 2.5–3.0% in the medium term.
- Persistent wage growth, yen depreciation, and improving labour market conditions underpin inflation forecasts. However, due to commodity price volatility and exchange rate sensitivity, inflation risks are tilted to the upside.
- While financial conditions remain accommodative, future rate hikes are likely if inflation expectations and wage-price dynamics sustain alignment with the BoJ’s medium-term stability target of 2%.
January 23, 2025

Norway: Rates Held At 4.5% (Consensus 4.5%) in Jan-25
- The Norges Bank kept the policy rate unchanged at 4.5%, in line with expectations, and reiterated its guidance for a potential reduction in March as inflation moderates further.
- Inflation has decelerated faster than anticipated, with headline CPI at 2.2% in December, though core inflation remains above target due to persistent wage growth and high business costs.
- External factors, including rising policy rate expectations among trading partners and potential trade barriers, alongside domestic economic resilience, will influence the timing and magnitude of future rate adjustments.
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