Major Economies' Rate Paths To Split As Economic Growth Divergence Widens

2025-01-28 14:50:00 ET

Summary

• Economic strength in the US relative to other major economies is likely to drive contrasting paths for interest rates across the globe.
• With varying rates of growth and inflation, the European Central Bank and Bank of England are likely to cut benchmark interest rates steadily this year, while the US Federal Reserve looks to take a more cautious approach.
• Other central banks in developed economies, such as the Bank of Japan, are working in the opposite direction.
• While developed economies are increasingly pursuing independent and insular monetary policy paths, many emerging economies with external debt denominated in US dollars have had to monitor US monetary policy and stronger currency more closely.

Economic strength in the US relative to other major economies is likely to drive contrasting paths for interest rates across the globe....

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