Central Banks Slash Rates Worldwide, But Japan Stands Alone

Major central banks are ending 2025 with a clear trend: interest rates are falling globally. The U.S. Federal Reserve, the European Central Bank, and the Bank of England have all cut borrowing costs this year. This marks a unified shift away from the high rates used to fight inflation. The move is intended to support economic growth. The U.S. Federal Reserve has been aggressive. It cut rates by 0.75 percentage points, or 75 basis points, in 2025. Officials now signal two more cuts are likely next year. This policy will continue under new leadership. Jerome Powell's term as Fed Chair is ending, as scheduled. His successor will oversee the planned reductions. Japan is the notable exception. The Bank of Japan is keeping its ultra-low interest rates steady. This highlights the country's different economic situation compared to the rest of the developed world. The global rate-cutting wave provides relief for borrowers and businesses worldwide.