Central Banks Face Packed Agenda in December

(MENAFN) The world's major central banks approach December confronting a packed agenda as inflationary pressures threaten to intensify, forcing policymakers toward more measured strategies.

Employment volatility and persistent inflation challenges are complicating the Federal Reserve's path forward, with monetary authorities worldwide closely monitoring the American institution's next moves.

Trade war escalation driven by U.S. tariff policies has amplified both commercial friction and macroeconomic instability across global markets throughout 2024—now central banks are positioning to wrap up this turbulent year by prioritizing inflation combat while tariff anxieties diminish.

December will bring critical monetary policy announcements from the Fed, the European Central Bank (ECB), the Bank of England (BoE), the Bank of Japan (BoJ), the Reserve Bank of Australia (RBA), and the Turkish Central Bank (TCMB).

Federal Reserve Poised for December Rate Reduction
Market indicators suggest the Fed will likely reduce rates at its upcoming session after a 43-day government shutdown—the nation's most extended—combined with stabilizing inflation metrics and softening labor market figures.

Money market projections place the probability of a 25-basis-point Fed rate reduction in December at 86%. Internal divisions persist among Fed policymakers regarding strategy—certain officials advocate restraint to protect anti-inflation progress, while others argue current conditions support easing measures.

October saw the Fed trim its benchmark rate by 25 basis points to a 3.75–4% range, matching forecasts. This marked the institution's second rate decrease in 2024. Fed Chair Jerome Powell acknowledged following that session "that there was a strong divide between opinions within the committee and that further cuts are not for certain."

The Bank of Canada, another focal point for market participants, will reveal its interest rate verdict on the identical date but preceding the Fed's announcement.

ECB and BoE Rate Decision Expectations Mount
The ECB is anticipated to maintain current rates on Dec. 18, following the eurozone's annual inflation reading of 2.1% in October—aligned with projections and representing a downtick from prior figures.

Regional inflation now hovers near the ECB's medium-term objective, with analysts believing the institution has completed its easing phase for this calendar year.

Money market data indicates the ECB is highly unlikely to implement a rate cut at its forthcoming session. The bank had previously reduced three core policy rates by a cumulative 100 basis points in 2024 before halting adjustments in July.

Separately, the BoE is forecast to lower its primary policy rate to 3.75% on Dec. 18.

The institution delivered a 25-basis-point cut in August, elevating its aggregate reduction to 75 basis points. Should this month's anticipated cut materialize, the BoE's total rate decrease would reach 100 basis points for 2025.

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