In April 2025, the momentum of interest rate cuts by major central banks significantly decelerated, reflecting a cautious approach amid global economic uncertainties and escalating trade tensions. Of the five central banks from the G10 group that convened in April, only the European Central Bank (ECB) and the Reserve Bank of New Zealand (RBNZ) implemented rate reductions, each lowering their rates by 25 basis points. Conversely, Australia, Japan, and Canada opted to maintain their benchmark rates, indicating a more reserved stance in monetary policy adjustments.
This shift in policy direction is mirrored in emerging markets, where the pace of rate cuts also slowed. Among the 13 central banks in developing economies that held meetings in April, only four—India, Thailand, the Philippines, and Colombia—eased their monetary policies by 25 basis points each. Notably, Turkey took an unexpected turn by raising its interest rates by 350 basis points to counteract capital outflows amid domestic political instability.
The global trend of slowing monetary easing is attributed to several factors. Persistent inflationary pressures, particularly in advanced economies, have tempered the enthusiasm for aggressive rate cuts. Additionally, the ongoing trade disputes, notably between the United States and other major economies, have introduced uncertainties that central banks are factoring into their policy decisions. These developments suggest that while central banks remain vigilant in their efforts to stimulate economic growth, they are adopting a more measured approach, balancing the need for monetary accommodation with the realities of inflation and geopolitical risks.
As central banks navigate these complexities, the financial markets are closely monitoring their actions. The subdued pace of rate cuts may influence investor expectations and market dynamics in the coming months. Stakeholders across various sectors, including banking, investment, and trade, will need to stay attuned to these developments to adapt to the evolving economic landscape.
