The most-watched policy week of 2025 is here. Markets expect the Federal Reserve to cut on Wednesday, 17 September. The Bank of England decides on Thursday, 18 September. Norges Bank also decides on Thursday morning, 18 September. The Bank of Japan follows on Friday, 19 September. These decisions will shape rate paths, FX trends, and risk appetite into year-end.
Why this week matters
Policy turns tend to cluster. When the Fed moves, other central banks reassess their own trade-offs. If growth slows and inflation cools, coordinated or staggered easing often follows. This can reset cross-market correlations and volatility.
What to expect from each central bank
Federal Reserve, 17 September
Consensus leans toward a 25 basis point cut. The key is guidance. If Chair Powell signals more cuts in 2025, front-end yields may likely fall further and the dollar can soften. If he frames this as a one-and-done move, yields may bounce and the dollar can firm.
Bank of England, 18 September
The BoE has flagged caution. Sticky services inflation and wage dynamics argue for patience. A hold would keep front-end Gilt yields supported. A surprise cut would pressure sterling and steepen the curve. The decision lands one day after the Fed, which can amplify FX swings.
Norges Bank, 18 September
Markets are split after firm inflation and mixed growth data. A hold at 4.25 percent is plausible. A cut would weaken NOK unless oil jumps. The meeting includes a fresh Monetary Policy Report, so the rate path update can move NOK even if the policy rate stays unchanged.
Bank of Japan, 19 September
BoJ policy remains the wild card. A steady stance would keep carry trades supported. Any tightening bias or guidance on balance sheet changes could spark JPY strength and a global de-risking wave. Timing and communication matter.
Are we at the start of a new easing cycle?
Three conditions point in that direction. Growth is cooling in several regions. Core inflation has eased from peaks. Labour markets show softer momentum. If the Fed cuts and signals openness to more, other banks can follow at their own pace. The cycle may be uneven. The BoE faces sticky services inflation. The BoJ is still normalising. The SNB meets the following week. The Riksbank will communicate its September decision on the 23rd. Divergence will create two-way FX moves rather than a one-directional global trade.
Market implications if easing gathers pace
- Rates : Front-end yields fall first. Curves can steepen if growth risks fade. If guidance is timid, curves can bull-flatten instead.
- FX : A dovish Fed usually weighs on the dollar. Relative policy paths matter more. Sterling reacts to the BoE tone. NOK reacts to the rate path and oil. JPY rallies if BoJ hints at more normalisation.
- Equities : Lower discount rates help duration-heavy sectors. Banks often lag on curve shape. Earnings guidance still decides leadership.
- Commodities: Gold benefits from lower real yields and a softer dollar. Oil trades on the growth impulse and supply news. Copper tends to respond to China's sensitivity.
What traders often watch
- Powell’s language on “balance of risks” and “data dependence.”
- BoE vote split and inflation guidance.
- Norges Bank’s updated rate path and growth assumptions.
- Any BoJ hints on balance sheet or rate corridor changes.
- Cross-asset reactions in the first hour after each decision.
Tactics for active traders
- Prepare scenarios before each decision with clear levels.
- Use volatility measures to size risk.
- Consider staggered entries rather than single trades.
- Respect liquidity gaps around statements and press conferences.
- Reassess after press Q&A. Tone often shifts between statement and conference.
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