LONDON, Dec 23, 2025 – Global central banks have executed the fastest and most extensive interest rate cuts since the 2008 financial crisis, with both developed and emerging economies easing monetary policy aggressively throughout 2025. Analysts describe this as the most significant central bank easing push in over a decade.

G10 Central Banks Lead the Easing Cycle

Nine of the ten central banks overseeing the most traded currencies – including the U.S. Federal Reserve, European Central Bank (ECB), Bank of England (BoE), and the central banks of Australia, New Zealand, Canada, Sweden, Norway, and Switzerland – lowered benchmark lending rates this year. Collectively, these institutions delivered 850 basis points of easing across 32 rate cuts, marking the highest number of reductions since 2008 and the largest cumulative easing since 2009.

This marked a sharp reversal from 2022 and 2023, when central banks aggressively hiked rates to combat inflation triggered by rising energy costs following Russia’s invasion of Ukraine. Japan was a notable exception in 2025, raising rates twice.

Outlook for 2026: A Shift in Tone

Analysts suggest that 2026 could see a shift in monetary policy, particularly in the second half of the year. James Rossiter, head of global macro strategy at TD Securities, noted, “We think the ECB will hike next year, and the RBA [Reserve Bank of Australia] and BOC [Bank of Canada] will get close to it.”

JPMorgan’s head of global macro research, Luis Oganes, added, “During 2025, the Fed either stayed put or cut rates in every meeting; hikes were never on the agenda. In 2026, that dynamic is likely to change, introducing more two-sided risk.” December 2025 data already showed a slowdown in easing momentum, with only the Fed and BoE cutting rates while Japan raised theirs.

Emerging Market Central Banks Ramp Up Rate Cuts

Emerging economies saw even more aggressive policy easing. Eight central banks from a sample of 18 developing nations – including Turkey, Russia, India, Mexico, Thailand, the Philippines, Poland, and Chile – collectively delivered 350 basis points of cuts in December alone. The annual total for 2025 reached 3,085 basis points across 51 moves, far exceeding the 2,160 basis points of cuts recorded in 2024 and representing the largest easing effort in emerging markets since at least 2021.

Despite these cuts, some emerging markets also implemented 625 basis points of hikes during the year, less than half the 1,450 basis points of tightening in 2024. Analysts expect continued easing in countries like Brazil and Hungary, as well as extensions of cutting cycles in other emerging markets.

Inflation Remains Under Control

According to Giulia Pellegrini, managing director at Allianz Global Investors, inflation in emerging markets has remained largely under control, aided by proactive monetary policies. This contrasts with the more cautious approach seen in many developed economies, highlighting a divergence in global monetary strategies.

The historic pace of rate cuts in both developed and emerging markets reflects the global effort to support economic growth and maintain financial stability, even as uncertainty looms over 2026. Investors and analysts are closely monitoring central bank communications, as any signs of policy tightening or shifts in strategy could significantly impact global markets.