Big central bank rate cuts slow with tariffs and politics in focus

The pace of global rate cuts is slowing as the European Central Bank nears the end of its easing cycle, the US Federal Reserve stays cautious about tariff-driven inflation and investors watch to see whether Britain speeds up from here.

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The Fed struck a hawkish tone alongside holding rates steady, an approach that lifted the dollar and assuaged fears that President Donald Trump's intense pressure on chair Jerome Powell has eroded central bank independence.

Here's where IO big central banks stand: Bets that the Swiss National Bank will use negative interest rates to tackle the seemingly unstoppable rise of the safe haven franc have faded after it kept benchmark borrowing costs on hold at O per cent in June.

Traders regard another pause in September as near certain and speculate that the SNB has started intervening to weaken the franc.

The Bank of Canada held its key policy rate at 2.75 per cent for the third straight meeting on Wednesday, citing lower risks of a severe and escalating global trade war.

But it declined to give detailed economic forecasts, citing uncertainty around US trade policy, and said that if the economy weakened further it could cut rates again.

The BoC has eased rates by 225 basis points since June 2024, and markets see a reasonable chance of one more cut by year end.

Canada remains uniquely vulnerable to Trump's trade war given the deep, broad ties between the neighboring economies.