Global Central Banks Brace for Busy Week as Bank of England Poised to Pause Easing Cycle
Global markets are entering a crucial policy week dominated by interest-rate decisions across Europe, North America, and Asia.
At the center of attention is the Bank of England (BOE), widely expected to break its year-long rhythm of quarterly rate cuts and hold borrowing costs steady at 4% on Thursday.
The decision comes as the UK battles inflation still nearly twice the central bank’s 2% target, while policymakers await the government’s autumn budget later this month. Economists say the BOE is likely to stay cautious after a stretch of weaker growth and mixed inflation readings, choosing to assess fiscal developments before resuming cuts.
Bank of England Eyes Stability Ahead of Budget
The expected hold would mark the end of a steady easing cycle that began in August 2024. While the Federal Reserve moved again this week to lower its policy rate, Governor Andrew Bailey has warned that any further BOE action will depend on inflation data and the tone of Chancellor Rachel Reeves’ upcoming budget on November 26.
Investors are already pricing in a roughly 60% chance of a December cut, betting that slowing wage growth and softer output will nudge policymakers toward easing before year-end. But with headline inflation still running close to 4%, most analysts see a brief pause as a prudent step.
Bloomberg Economics’ Dan Hanson and Ana Andrade note that “rates are now close to neutral,” and that the BOE will likely wait for “a clear downtrend in inflation” before committing to further cuts — potentially in February or April next year.
Central Banks Diverge Across Continents
While the BOE weighs its options, other major central banks are also navigating diverging economic signals. The Reserve Bank of Australia is expected to hold rates at 3.6% on Tuesday as officials debate whether the country’s slowing labor market justifies more easing. Across Asia, policymakers in Malaysia, Indonesia, and South Korea are also expected to stay put, while China’s upcoming inflation data may confirm continued disinflation pressures.
In Europe, the Riksbank, Norway’s Norges Bank, and the Czech National Bank are all preparing to hold policy steady after months of aggressive cuts. Sweden’s key rate remains at 1.75%, while Norway and the Czech Republic are likely to maintain theirs at 4%. Inflation has eased across the region, though policymakers remain cautious about declaring victory.
Mixed Outlook in the Americas
Across the Atlantic, the Federal Reserve has signaled patience after multiple rounds of easing this year. Chair Jerome Powell’s latest comments dampened expectations of another cut in December, emphasizing that the path forward depends on employment and inflation data — both now distorted by the ongoing U.S. government shutdown.
In Canada, all eyes are on Prime Minister Mark Carney’s first federal budget, due Tuesday, which aims to boost infrastructure investment while trimming operating costs. The package is expected to feature pro-growth tax reforms and a new immigration plan targeting skilled technology workers displaced by U.S. visa restrictions.
Meanwhile in Latin America, Mexico’s central bank is tipped to deliver another quarter-point rate cut, bringing its benchmark down to 7.25%, as inflation cools and growth stalls. Brazil’s central bank, by contrast, is expected to keep rates frozen at 15%, holding fire until early 2026. Argentina’s data flow — covering tax receipts and industrial output — will test investor faith in President Javier Milei’s market reforms following his party’s midterm victory.
Asia’s Factory Pulse and Trade Tensions
From China to India and Japan, factory output data arriving this week will gauge how much global trade tensions and new U.S. tariffs are weighing on Asia’s industrial base. Economists expect soft readings from China and South Korea but mild resilience in India and Taiwan. ASEAN economies such as Indonesia and Thailand are also releasing manufacturing PMIs that could show how fragile export demand remains despite Washington’s new trade agreements.
In Japan, a dense schedule of reports — from wage growth to household spending — will help the Bank of Japan assess whether rising salaries are finally driving sustained inflation.
Europe’s Patchwork Recovery
In the euro area, Germany’s manufacturing sector remains the weak link. Upcoming data on factory orders and exports may reveal further stagnation even as France and Spain report solid expansion. Italy’s economy has flattened again, highlighting the uneven nature of the region’s rebound.
Elsewhere, Switzerland’s inflation report is expected to confirm a modest pickup in prices after three months of near-zero growth, while Turkey continues to grapple with inflation north of 30%.
A Global Pause Before the Next Shift
Taken together, this week’s meetings highlight the same theme: central banks, from London to São Paulo, are catching their breath. After a year of steady rate cuts aimed at cushioning fragile recoveries, policymakers are now balancing weak growth against stubborn inflation and political uncertainty.
The next few weeks — shaped by the BOE’s decision, Reeves’ UK budget, and fresh inflation readings from Asia — will likely set the tone for global monetary policy heading into 2026.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
