In September 2024, the Federal Reserve's significant interest rate cuts triggered a wave of interest rate reductions among Global central banks – now, the market's focus is once again tightly on the Federal Reserve.

Next Wednesday, the Federal Reserve will hold its last meeting of the year to decide whether to cut interest rates, followed by Japan, Nordic countries, the United Kingdom … by the close of next Friday, at least 22 Global central banks will announce their interest rate decisions, collectively accounting for two-fifths of the Global economy.

Analysts believe that although the Federal Reserve is likely to announce another 25 basis point cut next Wednesday, the arrival of 2025, as well as the tariff policies soon to be implemented by Trump's new government, may lead Federal Reserve officials to remain cautious about further rate cuts. David Wilcox, Director of Economic Research, stated:

“Trump has promised to take a series of measures that will affect inflation and economic activity, making the Federal Open Market Committee's (FOMC) decisions more complex. Since monetary policy has a lag, policymakers aim to set policy at each meeting based on their best understanding of the economic situation for the next year or two.”

Meanwhile, markets expect that the Bank of Japan will not raise interest rates again until 2025, and the Bank of England is also expected to remain unchanged next Thursday. As for the Nordic countries, there are still significant differences in monetary policy; the Swedish central bank is almost certain to proceed with its fifth rate cut, while the Norwegian central bank may delay its rate cut until next year.

USA, Canada

Economists predict that Personal Consumption Expenditures (PCE) in the USA will rise by 0.2% in November, the smallest increase in three months, and this report will also show strong growth in consumer spending and income, indicating resilience in the economy. Retail sales data to be released next Tuesday may also reflect a similar situation.

In addition, next week the USA will release data on November's industrial production, housing starts, and existing home sales.

Analysts predict that after the interest rate decision on Wednesday, Federal Reserve officials may express relief that price pressures are easing.

In Canada, Finance Minister Chrystia Freeland will release a budget update next week, with the market generally speculating that she has failed to fulfill her promise to keep the budget deficit at or below 4.01 billion Canadian dollars. At the same time, this document may include new border security spending to address Trump's tariff threats.

Additionally, the market expects that next week’s Canadian inflation data for November will again fall below the 2% target, and in the year-end speech, Bank of Canada Governor Tiff Macklem will review the pace of interest rate cuts and forecast potential trade conflicts.

Asia

Analysts point out that Asia will kick off next week with a series of economic data from China, among which industrial production and retail sales data are the most critical.

PMI data from Australia, India, and Japan will also be released on Monday, providing the latest clues for regional economic growth.

In addition, Indonesia, Japan, Malaysia, and New Zealand will also release trade data next week.

Regarding central bank interest rate decisions, Analysts expect that the Bank of Thailand and the Bank of Japan will announce to maintain interest rates unchanged. Recent statements from Bank of Japan officials regarding the rate cut path have been vague, leading the market to anticipate that the Bank of Japan will delay interest rate hikes.

Pakistan is expected to start cutting interest rates this week due to a slowdown in inflation; Indonesia and the Philippines are each expected to cut interest rates by 25 basis points.

EMEA

Analysis suggests that the Bank of England will almost certainly maintain interest rates unchanged at its final meeting of the year. Next week's labor report is expected to show a rebound in annual salary growth in the UK, while inflation data may indicate a rise in core inflation, further supporting the cautious stance of the central bank.

The following are market expectations for interest rate decisions by other central banks in the region:

Hungary: Previously, inflation accelerated, and it is expected to maintain the interest rate unchanged on Tuesday;

Czech Republic: Expected to maintain interest rates unchanged on Thursday;

Sweden: Although core inflation has reached its highest point in six months, central bank officials may continue to cut interest rates by 25 basis points based on third-quarter growth data;

Norway: It is expected to keep interest rates unchanged, as although core inflation has rebounded, the central bank's survey shows that business prospects in Norway have slightly improved.

Russia: It is expected to raise interest rates by up to 200 basis points on Friday, reaching a record 23%, as previous data indicated that consumer price pressures remain above the 4% target.

Next Monday, France and Germany will release PMI, followed closely by two data points from Germany - the Munich Ifo Institute's business expectations index and the ZEW investor confidence index. On Thursday, France will release the business confidence index.

Additionally, next week Nigeria will release inflation data, expected to accelerate from 33.9% to 34.6%. On Wednesday, Nigerian President Bola Tinubu will deliver the annual budget speech, planning to raise the value-added tax rate to 10% and significantly reduce the budget deficit. According to Fitch Ratings' forecast, if Nigeria achieves this target, a rating upgrade may be obtained.

Next week, Israel will also release inflation data, with the inflation rate expected to be 3.6% in November, up from 3.5% in October. Analysts believe that this may prompt the Bank of Israel to reconsider adjusting interest rates in the second half of 2025.

Latin America

Economists predict that by the end of next year, Brazil's benchmark interest rate will rise from the current 12.25% to 13.5%. The market expectation is more aggressive, anticipating that by the end of 2025, Brazil's interest rates will increase by 200 basis points.

Argentina will release November budget balance data and third-quarter economic growth data this week, which may show a significant rebound in Argentina's economic growth.

The Central Bank of Chile is expected to continue lowering interest rates by 25 basis points to 5% with the support of the consumer price report in November.

As for Mexico, the second largest economy in Latin America, core inflation has been declining for 22 consecutive months, and the economy is slowing down. Therefore, the market expects the Central Bank of Mexico to continue lowering rates by 25 basis points, or even 50 basis points.

Colombia will release six economic reports next week, including GDP proxy data and retail sales data for October, which are expected to show a weakening of its economic momentum. Analysts expect that with the economic slowdown and continued decline in inflation, the Central Bank of Colombia will conduct its ninth consecutive rate cut next week.

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