Interest rates play a critical role in financial markets, influencing everything from currency values to borrowing costs. Here’s a weekly update on market expectations for interest rate changes across the G8 economies as we approach the end of the year and look ahead to 2025.

Rate Cuts Expected by Year-End

1. Federal Reserve (Fed):

• 2024 Year-End Expectation: 20 basis points (bps) cut, with an 82% probability of a rate cut at the next meeting.
• 2025 Expectation: An anticipated cut of 82 bps.

1. European Central Bank (ECB):

• 2024 Year-End Expectation: 28 bps cut, with an 88% probability of a 25 bps rate cut at the next meeting.
• 2025 Expectation: A larger cut of 138 bps is forecasted.

1. Bank of England (BoE):

• 2024 Year-End Expectation: 5 bps cut, with a 78% probability of no change at the upcoming meeting.
• 2025 Expectation: 64 bps rate cut anticipated.

1. Bank of Canada (BoC):

• 2024 Year-End Expectation: 39 bps cut, with a 58% probability of a 50 bps rate cut at the next meeting.
• 2025 Expectation: 100 bps cut expected.

1. Reserve Bank of Australia (RBA):

• 2024 Year-End Expectation: 3 bps cut, with an 88% probability of no change at the next meeting.
• 2025 Expectation: Rate cut of 46 bps anticipated.

1. Reserve Bank of New Zealand (RBNZ):

• 2024 Year-End Expectation: 53 bps cut, with an 85% probability of a 50 bps rate cut at the next meeting, and a 15% chance of a more substantial 75 bps cut.
• 2025 Expectation: 143 bps rate cut expected.

1. Swiss National Bank (SNB):

• 2024 Year-End Expectation: 32 bps cut, with a 72% probability of a 25 bps rate cut at the next meeting.
• 2025 Expectation: 70 bps rate cut expected.

Rate Hikes Expected by Year-End

1. Bank of Japan (BoJ):

• 2024 Year-End Expectation: 10 bps hike, with a 60% probability of no change at the next meeting.

The BoJ remains unique among G8 central banks, as it’s the only one expected to implement a rate hike by the year’s end, although a majority of market participants still anticipate no change at the upcoming meeting.

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The trend across most central banks is clear: a shift toward easing monetary policy, with various rate cuts expected by year-end and into 2025. However, each central bank’s policy path reflects the unique economic pressures and inflation dynamics of its respective region. While the BoJ is leaning towards a modest hike, the Fed, ECB, BoE, BoC, RBA, RBNZ, and SNB are all expected to cut rates, signaling a potential move toward more accommodative policy as global growth concerns and inflation stabilization come into focus.

This divergence in policy responses will likely shape global financial markets, affecting currency pairs, bond yields, and broader market sentiment in the months to come.