Global Banks Shift Course: The Fed Plans More Cuts, Europe Hesitates, and Japan Moves the Other Way

The Fed Plans More Cuts Despite Trump’s Pressure After the Federal Reserve’s September rate cut of 25 basis points, the U.S. central bank is preparing two more reductions by the end of 2025, with gradual easing expected to continue into 2026.

Governor Stephen Miran and other Fed officials face mounting political pressure from the White House, as President Trump pushes for faster cuts to stimulate the economy. According to current projections, the target rate could fall to between 3.25% and 3.50% by 2026, returning to pre-pandemic levels.

Still, the Fed remains cautious, watching how Trump’s new tariffs affect inflation and the labor market. Trump’s influence is growing. He is expected to nominate a new Fed Chair soon, with Jerome Powell’s term ending in May.

His attempt to remove Governor Lisa Cook was blocked by the Supreme Court, giving the Fed some breathing room — but the pressure isn’t going away.

Global Trend: Most Central Banks Ease — Except Europe Out of 23 major central banks tracked by Bloomberg, 15 are expected to cut rates this year.

Countries such as Australia, Canada, South Korea, and Brazil have already begun easing monetary conditions to support growth. But Western Europe stands apart. The European Central Bank (ECB) and the Bank of England (BoE) are holding steady, waiting for clearer signs that inflation is truly under control. Nordic central banks are taking a similar “pause and watch” approach.

Even Switzerland, which may briefly dip into negative territory one last time, signals that its room for further cuts is nearly exhausted.

Japan Surprises Markets — Prepares to Raise Rates In contrast, Japan’s central bank is breaking ranks.

The Bank of Japan (BoJ) is preparing for its first rate hike in over three years, as inflation remains above its 2% target and the economy proves resilient to U.S. tariffs. Governor Kazuo Ueda now has the backing of two board members who previously opposed tightening — even some of the most dovish voices have turned hawkish. Adding political intrigue, Sanae Takaichi, newly elected head of the ruling party, supports looser policy but is open to compromise with Ueda. Analysts now believe a BoJ rate hike could come as early as October.

Europe Holds the Line The ECB has made its stance clear: no more cuts for now.

Officials argue that inflation is stabilizing and the eurozone can withstand U.S. trade pressures.

The bank’s December meeting will include new projections through 2028. If inflation drops faster than expected, even hawkish members might consider renewed easing — but for now, the ECB is holding firm. In the United Kingdom, the Bank of England remains divided. Governor Andrew Bailey faces internal disagreement — some favor lower rates, while others warn that rising food prices and household expectations could fuel another inflation spike.

The next BoE meeting, scheduled between the release of September inflation data (expected around 4%) and the autumn budget on November 26, is shaping up to be pivotal.

Key Events This Week A packed week of economic data awaits: Tuesday: New York Fed inflation expectationsWednesday: FOMC meeting minutesThursday: Jerome Powell’s public remarksFriday: U.S. jobs report (if the government shutdown ends) Summary The global economy is gradually tilting toward looser monetary policy, but not uniformly.

While the U.S. and much of the world are cutting rates, Europe remains cautious, and Japan is turning hawkish. This divergence is reshaping currency dynamics, capital flows, and investor sentiment — and cryptocurrencies, which historically thrive on lower interest rates, could be among the biggest winners in the next monetary cycle.

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