Global Central Banks Set to Adjust Rates: US Likely to Cut for First Time in 2025
A flurry of central bank decisions this week, including the Federal Reserve, Bank of Canada, Bank of England, and Bank of Japan, is expected to reshape global interest rates. The US is poised for its first rate cut since 2024, amid economic headwinds and political pressure.
Interest RatesCentral BanksFederal ReserveGlobal EconomyEconomic DataReal Estate NewsSep 14, 2025
Starting on Wednesday, the Bank of Canada is expected to cut its benchmark overnight rate to 2.5%, reflecting recent weak jobs data and an economic contraction in the second quarter. The Fed is slated to follow suit, with most economists predicting a quarter-point rate cut. The ongoing tension between the Fed, led by Chair Jerome Powell, and the Trump administration over interest rates has been a significant factor. Powell's decision to cut rates is seen as a strategic move to maintain the Fed's independence while addressing economic challenges.
The Bank of England (BOE) is scheduled to meet the following day, with expectations of a hold on interest rates after an August cut. However, the BOE's crisis-era bond holdings, known as quantitative tightening, may see a slowdown due to recent market volatility. The Bank of Japan (BOJ) is expected to maintain its current policy, despite ongoing discussions about potential future hikes as inflation remains high and growth holds steady.
In the broader context, central banks in advanced economies such as Norway and Canada are likely to adjust rates by a quarter-point, while others like Indonesia, Brazil, and South Africa are expected to maintain a watchful stance without changing rates. This week's decisions will affect two-fifths of the global economy, including four of the Group of Seven (G7) industrialized nations.
Economic reports and data releases will also be in the spotlight. In the US, retail sales data for August is forecast to show a 0.3% increase, while jobless claims on Thursday will provide insights into the labor market's health. Canada's inflation is expected to rise to 2% annually, and data on existing home sales and housing starts will offer a snapshot of the real estate market.
Asia will see three central bank decisions, with the Bank of Japan's policy meeting on Friday. China's August data, including retail sales, industrial output, and investment figures, will provide a read on the effectiveness of targeted support measures. Property metrics will highlight the depth of the housing slump. India's trade deficit is expected to shrink, and Pakistan's central bank is likely to hold rates.
In Europe, UK inflation data will be released before the BOE's decision. The headline rate is expected to remain at 3.8%, with the BOE likely to keep its key rate unchanged at 4%. The European Central Bank (ECB) will host a two-day conference, and President Christine Lagarde will attend a meeting of euro-zone finance ministers. Key data releases include trade numbers, industrial production, and inflation.
Swiss export figures and credit ratings reviews for Italy, Greece, and France will also be significant. In Israel, annual inflation is expected to ease, potentially leading to a rate cut at the next meeting. Across Africa, several monetary decisions are scheduled, reflecting the diverse economic conditions of the continent.
In Latin America, Brazil's GDP-proxy data and unemployment report will provide insights into the region's largest economy. Colombia and Peru will report on various economic indicators, while the Banco Central do Brasil is expected to keep borrowing costs at a 19-year high. Argentina's economic program faces challenges, with growth forecasts being revised downward.
This week's central bank decisions and economic data will be crucial for policymakers and investors alike, setting the tone for the global economy's trajectory in the final quarter of 2025.
Frequently Asked Questions
What is the expected outcome of the Federal Reserve's meeting this week?
The Federal Reserve is expected to cut interest rates by a quarter-point, the first rate cut since 2024, to stimulate the economy and address economic headwinds.
Which other central banks are making decisions this week?
The Bank of Canada, Bank of England, and Bank of Japan are among the central banks making key decisions this week, alongside several others in advanced and emerging economies.
What economic data is expected to be released this week?
Key economic data releases this week include US retail sales and jobless claims, Canadian inflation, Chinese economic indicators, UK inflation, and Swiss export figures.
How might the Bank of England's decision affect the UK economy?
The Bank of England is expected to keep interest rates unchanged but may slow down quantitative tightening due to market volatility, which could impact the UK's economic recovery.
What challenges are facing central banks in emerging economies like Brazil and Argentina?
Central banks in emerging economies like Brazil and Argentina are grappling with slowing growth, high inflation, and political challenges, which may influence their monetary policy decisions.
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