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The specter of Trump leads to a final round of interest rate moves

(Bloomberg) — Central banks on four continents will make a final round of changes to borrowing costs in the coming week before Donald Trump’s return to the White House raises the prospect of turmoil in global trade.

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By the time policymakers from Australia, Canada, Brazil and the eurozone gather for their first scheduled meetings of 2025, the newly elected US president will have taken office and a potential wave of tariffs could move closer to reality.

The impending change in America will help reinforce a particularly unsynchronized phase in monetary policy, as different economies face different inflation risks.

Australian policymakers are likely to leave rates unchanged on Tuesday, while their Canadian counterparts, wary of the trade disruption that could quickly emerge from across the border, could make another cut of as much as half a percentage point the next day .

In Brazil, where the currency was hit last week by Trump’s threat to impose tariffs on the BRICS bloc, officials are poised to raise borrowing costs to quell rising inflationary pressures.

And for euro zone officials setting interest rates on Thursday, the focus is quickly shifting from monitoring ongoing risks to consumer prices to worrying about the impact of the potential hit to global trade. ECB President Christine Lagarde and her colleagues will cut interest rates by a quarter of a percentage point, just like the Swiss, whose currency attracts speculators in times of geopolitical tension.

These decisions are among the highlights in a period of concentrated monetary policy action that led to the Federal Reserve’s decision on December 18, which economists believe could lead to another quarter-point interest rate cut in the US.

What Bloomberg Economics says:

“It is highly likely that the ECB will cut rates by 25 basis points at its next meeting on December 12 and Governing Council members are drawing battle lines for what will follow in 2025.”

– David Powell, senior economist.

Elsewhere, US inflation and UK growth figures will be among the highlights. Click here for what happened last week, and below is our summary of what’s going to happen in the global economy.

USA and Canada

Several inflation reports, including Wednesday’s Consumer Price Index data, will give Fed policymakers a final look at the price environment ahead of their meeting the following week. Any indication that progress on inflation has stalled could undermine the chances of a third straight rate cut.

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