The “Super Central Bank Week” at the end of October 2025 has concluded. The policy moves of the Federal Reserve, European Central Bank (ECB), Bank of Japan (BOJ), and Bank of Canada have revealed a new trend of global monetary policy divergence. Among them, the Federal Reserve and the Bank of Canada chose to cut interest rates by 25 basis points, while the ECB and BOJ kept interest rates unchanged. Behind this “divergence” lies the refined regulatory considerations of central banks based on domestic economic data.
The Federal Reserve announced its second interest rate cut this year at this meeting, lowering the benchmark interest rate by 25 basis points, and simultaneously announced the end of its balance sheet reduction program starting from December 1. The combined operation of “interest rate cut + stopping balance sheet reduction” reflects its balancing act among inflation, economic growth, and financial stability. Although U.S. inflation data has gradually declined, Federal Reserve Chairman Jerome Powell sent a hawkish signal in his post-meeting speech, emphasizing the uncertainty of interest rate actions in December and stating that interest rate cuts are not a predetermined path. This statement reflects the Federal Reserve’s “data-dependent” policy logic – refusing to preset a policy trajectory against the backdrop of unstable economic recovery momentum.
The Bank of Canada became the most aggressive actor in this Super Central Bank Week, lowering its key overnight interest rate to 2.25%, the lowest level since July 2022 and the fourth interest rate cut this year. The Bank of Canada also sharply lowered its economic growth forecast, revising the 2025 real GDP growth rate from 1.8% to 1.2%, and further lowering the 2026 forecast to 1.1%. Governor Tiff Macklem admitted that declining exports, weak business investment, and a cooling labor market have jointly dragged down the economy. After this interest rate cut, if there are no major changes in the economic and inflation outlook, the current interest rate level may remain until 2026.
The ECB and BOJ, however, chose to stand pat. ECB President Christine Lagarde stated that the “downside risks” to euro zone economic growth have eased. Although the recovery remains modest, the current interest rate level is sufficient to drive inflation to gradually return to the target. The BOJ kept its policy interest rate unchanged at 0.5% with 7 votes in favor and 2 against. Governor Kazuo Ueda pointed out that the Japanese economy “is recovering moderately but still shows signs of weakness”, and the interest rate hike decision will be entirely based on data rather than a preset timetable.
Analysts point out that the difference in the economic cycles of various countries is the core reason for policy divergence. The United States is facing pressure from tight financial liquidity, Canada’s economic growth has slowed significantly, while the euro zone’s risks have eased and Japan’s recovery is weak. This structural difference makes it difficult for the world to form a unified monetary policy pace, and refined regulation of “each for its own” will become the mainstream in the future.
