ECB, BOE, Riksbank and Norges Bank make final calls of 2025
An illumination projected onto the Grossmarkthalle building at the headquarters of the European Central Bank in Frankfurt, Germany, on May 9, 2025, to mark the 75th anniversary of the Schuman Declaration.
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Investors are preparing for the final interest rate decisions of 2025, with four European central banks announcing their monetary policies and macroeconomic outlooks on Thursday.
The European Central Bank, Bank of England, Riksbank and Norges Bank are meeting but only one is expected to change interest rates.
This is what to expect:
European Central Bank
The ECB is expected to keep interest rates steady as the latest economic data does not indicate a correction.
But investors will be more interested in comments about rising tensions within the governing council, where some members, such as Isabel Schnabel, have publicly endorsed the market’s view that the next rate hike will be higher, while others think there is still room for a cut.
Christian Kopf, who manages bond portfolio management at German asset manager Union Investment, told CNBC: “I do not expect a rate change in the Eurozone for now. If there is a change in 2026, we will most likely see an interest rate increase towards the end of 2026 or the beginning of 2027.”
The ECB is expected to upgrade its growth outlook for the eurozone as it publishes new staff projections and internal economic forecasts.
CNBC will broadcast the ECB’s monetary policy decision starting at 1pm London time, with guests including Lorenzo Codogno, founder of Lorenzo Codogno Macro Advisors, and Al Cattermole, Fixed Income portfolio manager at Mirabaud Asset Management.
Norges Bank
Norway’s central bank kept interest rates steady at 4% on Thursday, while economists suggested the next rate cut might not come until summer 2026. Norges Bank announced its policy decision at 10am local time, 9am London time.
Bank said thursday He stated that the outlook is uncertain “but if the economy develops generally as currently predicted, the policy rate will be further reduced next year.” But for now, Norges Bank’s policy makers assessed that “a restrictive monetary policy is still needed, inflation is still too high.” He added that his current forecast is “consistent with 1-2 rate cuts next year.”
Morten Lund, JPMorgan’s chief economist for Scandinavia, commented before interest rates were fixed that the bank’s guidance on Thursday “should be a step back against the markets’ growing expectations of a rate cut in March” and said it was currently seen as a “coin toss”.
Norges Bank
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Instead, JPMorgan expects the next rate cut to occur in June, but Norges Bank did not make a clear statement on the timing of the rate cut on Thursday.
CNBC will interview Norges Bank executive Ida Wolden Bache at 12.10pm London time and 13.10pm CET.
Riksbank
The Swedish central bank kept the policy rate unchanged at 1.75% when it announced its decision at 9.30 am London time (CET).
According to Franziska Fischer from UBS Investment Bank, who said that the Riksbank’s easing cycle has ended, no change is expected in the coming quarters.
The Swedish flag is hung on the country’s central bank.
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“The Riksbank cut the policy rate by 25 basis points in September, but kept it constant in November, signaling that the policy rate will probably remain unchanged ‘for some time’,” Fischer said. he said.
According to UBS, developments since November do not require a change in the interest rate outlook.
CNBC will interview Riksbank governor Erik Thedeen at 12:20 London time (13:20 CET) on Thursday.
Bank of England
The Bank of England is the only central bank expected to cut interest rates on Thursday, with a slim majority of the bank’s nine-member monetary policy committee (MPC) expected to opt for a 25 basis point cut, dropping the base rate to 3.75%.
Interest rate cut expectations increased after the latest inflation data It fell sharply to 3.2% in November, and recent pessimistic economic data in the UK reflects dismal growth figures. increase in unemployment.
A decorated Christmas tree outside The Royal Exchange near the Bank of England (BOE) on Monday, December 16, 2024, in London, United Kingdom. The British central bank is expected to leave interest rates unchanged at 4.75% at its meeting on Thursday and maintain its guidance that a “phased approach to lifting policy restrictions is appropriate”. Photographer: Jason Alden/Bloomberg via Getty Images
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While inflation remains above the bank’s 2% target, the downward trend gives the bank room to maneuver in lowering interest rates to stimulate the economy, consumption and borrowing.
The government’s Autumn Budget last month was also considered disinflationary, as it included measures to reduce energy bills and freeze fuel tax and train fares.
CNBC’s “Decision Time” program, where the BOE’s decision will be broadcast live, is at 12:00 London time. Karen Tso will join the studio Jack Meaning, chief UK economist at Barclays, explains what the decision means for the economy, markets and consumers.
