Market commentary
Banking on trade policy uncertainty.
Central banks depository May 2025
The Trump administration’s attempt to transform the international trading system via tariffs has engendered a tremendous amount of uncertainty and market volatility. The administration’s decision to put the so-called reciprocal tariffs on hold pending negotiations with individual countries alleviated some of the concerns for the global economic outlook, at least in the near-term. Central banks continue to follow divergent monetary policies based on the conditions within their own countries/regions. The European Central Bank (ECB) cut its policy rate by another 0.25% in April, and the Bank of England (BOE) reduced its Bank Rate by the same margin in May—its first back-to-back rate cut since 2009. The BOE’s action was somewhat surprising because near-term economic prospects have improved modestly, and wage growth remains elevated. In addition, the harmonized inflation rate came in at 3.4% year-over-year as of March. In the U.S., the Federal Reserve (Fed) continues to hold the federal-funds rate steady as expected amid concerns that the tariffs on China will result in a period of goods inflation.
Central Bank | Current Rate | Prior Rate | Change | Next Meeting |
Fed | 4.25%-4.50% | 4.25%-4.50% | Unchanged | June 17-18, 2025 |
ECB | 2.25% | 2.50% | -0.25% | June 4-5, 2025 |
BOE | 4.25% | 4.50% | -0.25% | June 19, 2025 |
BOJ | 0.50% | 0.50% | Unchanged | June 16-17, 2025 |
BOC | 2.75% | 2.75% | Unchanged | June 4, 2025 |
Sources: Fed, ECB, BOE, BOJ, BOC. As of May 8, 2025.
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