Rate cuts come thick and fast in Europe and Canada as Trump tariffs loom

Naomi Rovnick - Reuters - 12/12
Central banks in the euro area and Switzerland cut rates on Thursday, a day after Canada slashed rates by a hefty 50 bps. Australia, meanwhile, eased its previously dovish tone this week, while Japan remains an outlier.
LONDON, Dec 12 (Reuters) - Central banks in the euro area and Switzerland cut rates on Thursday, a day after Canada slashed rates by a hefty 50 bps. Australia, meanwhile, eased its previously dovish tone this week, while Japan remains an outlier.
Here's where major rate-setters stand and what traders expect next.
The dot plot shows the policy rates of the G10 central banks on March 1, 2024 and Dec. 12, 2024. The dot for Dec. 12 for countries which have started cutting rates is in orange, which are steady is in yellow and for those which are hiking are in purple.

1/ SWITZERLAND

The Swiss National Bank, which has been at the forefront of monetary easing, cut rates by an unexpectedly large 50 basis points (bps) to 0.5% on Thursday, the lowest since November 2022 and the bank's biggest reduction in almost a decade.
Swiss annual inflation was most recently reported at just 0.7% and the SNB, which is alert to the safe-haven Swiss franc strengthening beyond levels domestic exporters can bear, said it could reduce borrowing costs again next year.
A line chart comparing inflation metrics over the past five years.

2/ CANADA

The Bank of Canada cut rates by 50 bps to 3.25% on Wednesday, marking the first time since the COVID-19 outbreak that it has implemented consecutive half-point cuts.
It indicated further easing would be gradual after annual inflation accelerated to 2%, but with Canada's weak economy threatened by U.S. President-elect Donald Trump's proposed tariffs, markets placed 70% odds on a 25 bps cut next month.
A line chart comparing inflation metrics over the past five years.

3/ SWEDEN

Sweden's economy is shrinking and its central bank, which lowered borrowing costs by 50 bps to 2.75% in November, has guided markets to expect further easing next year.
The Riksbank meets next week and markets see a 25bps cut as more likely than not, with about 90 bps of easing priced in by August.
A line chart comparing inflation metrics over the past five years.

4/ NEW ZEALAND

The Reserve Bank of New Zealand painted a bleak economic picture in its latest Financial Stability Report, and while it does not meet to set rates again until February, traders see good chances of swift and rapid cu...
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