Global Central Bank Policy Divergence Intensifies: Fed Cuts, ECB Holds, BOJ Hikes

Three Major Central Banks Policy Paths Diverge

In 2025, the monetary policy paths of the three major global central banks have diverged significantly. The Fed continues rate cuts based on cooling inflation, the ECB holds steady, while the BOJ historically exits negative rates and starts hiking.

Fed Rate Cut Path and Pace

The Fed has cumulatively cut rates by 75 basis points in 2025. Markets broadly expect 1-2 more cuts this year. Powell emphasizes the data-dependent decision framework.

BOJ Historic Pivot

The BOJ officially exited its eight-year negative rate policy in 2025 and implemented a rate hike to 0.25%. This marks the first BOJ rate hike since 2007.