Archive

December 11, 2025
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SNB: Zero Rate, Rising Policy Dilemmas

  • The SNB holds its policy rate at 0% in line with consensus. Markets now expect a prolonged pause, with little chance of negative rates in the near term.​
  • Despite near‑zero inflation, the SNB’s medium‑term forecasts justify keeping rates on hold, pointing to 0% policy rates well into 2026.​
  • Future rate moves hinge on franc strength, global trade risks and inflation persistence, with FX intervention preferred over renewed negative rates.​
December 11, 2025
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BSP Cuts Near Endpoint Amid Structural Headwinds

  • The BSP unsurprisingly cut rates by 25bps to 4.50% and signalled the cycle as near its end despite weakness; this matched the consensus but marks the fifth consecutive cut with 200bps total easing since August 2024.
  • Growth decelerated to a three-year low of 4.0% in Q3 amid governance concerns and trade policy uncertainty. Recovery is dependent on improved fiscal spending and confidence restoration.
  • Inflation forecasts are revised upward to 3.2% (2026) and 3.0% (2027), approaching the upper target band. Further easing is "likely limited" pending data showing effective transmission.
December 10, 2025
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Brazil’s High-Rate Path

  • Brazil's Copom unsurprisingly held the Selic at 15%, signalling a prolonged, highly contractionary stance to force inflation back toward the target.
  • Deanchored inflation expectations and resilient services inflation mean cuts are unlikely before clear disinflation and weaker labour data emerge.
  • Fiscal doubts, BRL weakness and US policy risks raise upside inflation pressures, keeping the door open to renewed hikes and delaying the start of an easing cycle.
December 10, 2025
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Dual Mandate, Divided Fed: 2026 Crossroads

  • The Fed cuts by 25bp for the third time, but hawkish dissent is deeper than voting suggests. Six members judged rates should still be 3.875%, and three members are pencilling in rate hikes next year.
  • Despite revising 2026 PCE inflation forecasts down to 2.4% (from 2.6%), the Committee still projects only one 2026 cut, making a hawkish shift in the reaction function.
  • 2026 rate projections split, with seven dots above the 3.375% forward median, four at the median, and eight below. Policy will depend on labour market and inflation data.

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