In these turbulent times of domestic politics, we must not overlook the monetary policy of major central banks, particularly the European Central Bank (ECB) and the US Federal Reserve (Fed). Given their key role in the economic stability of major global economies, their decisions are eagerly awaited by financial markets and economic players at the end of 2025. After a period marked by rate hikes to combat inflation, questions are multiplying: where are the ECB and the Fed heading? What are the challenges for households, businesses and markets?

Current economic situation

Since 2022, the ECB and the Fed have been raising their key interest rates at a steady pace to contain inflation, which has been affected by the energy crisis and supply chain tensions resulting, in particular, from the war in Ukraine and COVID. In 2025, inflation has fallen overall, but remains above the 2% targets set by both institutions.

• • For the Fed: Pending the latest economic indicators, but after disappointing initial figures, the markets are anticipating a 25 basis point monetary easing by the Fed when it announces its decision on 10 December 2025. In addition, US President Donald Trump's announcement of Jerome Powell's successor as head of the Fed will also have an impact on the markets.
  • For the ECB: In the eurozone, the ECB, which is more dependent on European economic data, faces its own challenges. Between sluggish growth, but with disparities between countries, and persistent inflation, particularly in services, the ECB could adopt a cautious stance. A cut is also being discussed, but probably in early 2026 rather than at the 18 December announcement.

Expected impacts on markets and the real economy

The Fed's decisions directly influence the dollar and capital flows. A rate cut could drive capital towards equity markets but would weaken the dollar. The upcoming decisions by the ECB and the Fed will be decisive for the direction of the global economy in 2026. While the Fed seems closer to easing, the ECB remains cautious in the face of persistent inflation and fragile growth. The markets are already anticipating these developments, but uncertainties remain, particularly regarding the pace and extent of rate cuts. For households and businesses, there would be repercussions on credit rates.

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