Tense Fed is set to lead global peers with interest-rate hold

Officials in Washington are widely expected to defy US President Donald Trump’s calls for lower borrowing costs on Wednesday at the end of their two-day meeting. Peers in Brazil, Canada, and Sweden may also retain current settings.

Those latter three were among more than a dozen, including the Bank of England and European Central Bank, whose chiefs spoke out in “full solidarity” with chair Jerome Powell, backing independence at a time when the administration in Washington is dialling up the pressure on him and his colleagues.

Aside from Trump’s frequent complaints at its unwillingness to slash interest rates, the Fed now faces grand jury subpoenas threatening criminal indictments, while the Supreme Court heard arguments on Wednesday on whether the president can fire Governor Lisa Cook.

Beyond that melodrama, every central bank is acting against a tense global backdrop, evidenced by the recent market rout in Japan, lingering investor concern over Trump’s designs on Greenland, and his incessant threats of further trade disruption.

“We are in a more shock-prone world,” Kristalina Georgieva, head of the International Monetary Fund, said Friday at the closing session of the World Economic Forum in Davos. “We’re not in Kansas any more.” What Bloomberg Economics Says: “We think most FOMC participants can cite data to support holding rates steady at the meeting. That degree of unity would be seen as a vote of support for Powell, who has come under fierce attack from the White House. The most interesting figures to watch are governors Christopher Waller and Michelle Bowman: If they vote with the majority to hold steady, they’ll be signalling to Trump that they side with Powell – including on Fed independence. We expect Waller to vote with the majority, but Bowman to dissent.” While policymakers are focused on the potential growth risks posed by tariffs, they’re also watchful for possible inflation pressures in the current environment.

As many as 18 central banks globally are on the calendar for decisions in the coming week. In contrast to the Fed, counterparts in Africa, confronting a different stage in the economic cycle, may unveil a wave of easing.

Elsewhere, inflation data from Australia to Brazil and Japan, Chinese industrial profits and gross domestic product in the euro region will be among the highlights.

US and CanadaFed officials are expected to hold rates steady after three straight cuts at the end of 2025. Powell is likely to telegraph his view that policy is well-positioned for now, but hold off from signalling much about where rates are headed. That will buy officials time to see the impact of previous reductions.

Recent data showing that the US unemployment rate declined in December while inflation holds above the Fed’s target may work to placate hawks and doves alike, potentially garnering more support for a pause in the easing cycle.