In September 2025, the Federal Reserve broke its long pause by cutting interest rates—the first cut since December—signaling a shift in its monetary strategy in response to cooling labor market data. The Fed has also indicated that further reductions are likely, with windows for cuts in both October and December now under watch.
Meanwhile, major central banks outside the U.S. are largely holding steady. In Switzerland, the central bank remains at 0%, even as markets speculate about returns to negative territory. Canada has trimmed rates to 2.5%, a three-year low, due to signs that employment and wage growth are softening. Sweden’s Riksbank has paused after earlier rate cuts, treating current inflation pressures as transitory.
In New Zealand, officials are expected to loosen policy again in early October—its rate currently sits near 3%. The European Central Bank is holding at 2%, suggesting its sequence of cuts might be winding down. Over in the UK, the Bank of England has held rates steady for now, possibly eyeing a cut in November as economic expansion slows. Australia’s strong GDP rebound has tempered expectations of further easing. Norway, despite a recent cut, is signaling fewer future moves as inflation remains sticky. And in Japan, the central bank maintains its rate at 0.5%; even as some board members push for tightening, the bank is also preparing to reduce certain asset holdings.
The overarching theme: the U.S. is leading a renewed easing cycle, while most global monetary authorities are choosing caution—balancing inflation risks, economic slowdown, and labor market fragility. Keywords like “Fed rate cuts,” “central bank interest rates,” “global monetary policy divergence,” and “timing of easing” drive the narrative. The international hold on most rate changes underlines how differently economies are reacting to inflation, labor market pressures, and growth prospects.
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