Heteronomics Archive

July 30, 2025

Canada: Policy Rate Held At 2.75% (Consensus 2.75%) in Jul-25

The Bank of Canada held its policy rate at 2.75% as expected, but disappointed dovish expectations. The decision reflects competing inflation and growth pressures.
Underlying inflation has risen to 2.5-3.0%, remaining well above the 2% target due to persistent cost pressures. This has shifted the Bank's priority toward price stability over accommodation.
Future rate cuts require both economic deterioration and contained tariff-related cost pressures. The Bank's scenario-based approach reflects unprecedented trade policy uncertainty.

July 29, 2025

The Central Bank of Chile unanimously cut the policy rate by 25 basis points to 4.75% in July 2025, in line with market expectations, marking the first reduction of the year following six months of policy stability.
The decision was driven by better-than-expected inflation outcomes, with the headline CPI measure falling to 4.1% in June while unemployment rose to 8.9%, well above the estimated neutral rate range of 8.0-8.5%.
The evolution of external risks will influence future rate decisions, particularly US tariff measures on copper exports, alongside domestic inflation convergence and labour market dynamics as the Bank moves gradually towards its neutral rate range of 3.5-4.5%.

July 16, 2025

Bank Indonesia cut its benchmark rate by 25bp to 5.25% in July 2025, marking the fourth easing since September amid low inflation and strong foreign exchange reserves.
The decision reflects confidence in 1.87% June inflation staying within the 2.5±1% target range, the stable rupiah supported by a robust intervention framework, and the need for growth stimulus.
Future easing depends on continued inflation anchoring, currency stability, and global developments, including US trade policy and Federal Reserve actions affecting capital flows.

July 10, 2025

The Bank of Korea held its base rate at 2.50% as expected, pausing its easing cycle after household loans surged 6.5 trillion won in June and housing prices accelerated in Seoul, demonstrating that financial stability concerns now outweigh immediate growth support needs.
While economic growth remains subdued with a revised 0.8% forecast for 2025 and trade uncertainty persists, the Committee prioritised evaluating recently strengthened household debt management measures over additional monetary stimulus, signalling a defensive policy stance.
Future rate cuts remain contingent on financial stability developments and external conditions, with September presenting the next likely opportunity for easing if household debt growth moderates and US-Korea trade relations stabilise.