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Global inflation struggles continue while major central banks, including the U.S. Federal Reserve (Fed), kept their monetary policies unchanged in March.

Uncertainties related to the protective trade stance of the U.S. alongside the dilemma of inflation and recession remains a key focus for economies worldwide.

As central banks persist in their battle against inflation, they continue to act cautiously due to uncertainties in the global economy, particularly regarding changing trade strategies.

Concerns that the U.S.’s protective trade policy may strengthen inflationary pressures and negatively impact growth are influencing decisions among other major economies.

In March, the Fed, the Bank of England (BoE), the Bank of Japan (BoJ), the Central Bank of Russia (CBR), the Czech National Bank, the Hungarian National Bank (MNB), the National Bank of Poland, the Swedish Riksbank, and the Norwegian Central Bank all left their policy rates unchanged.

Conversely, the Bank of Canada (BoC), the Swiss National Bank (SNB), and the Central Bank of the Republic of Turkey (TCMB) opted to cut rates.

Fed and BoE kept rates unchanged in March

The Fed maintained its policy rate within the expected range of 4.25% to 4.50% in March without changes.

The decision not to adjust the federal funds rate forecast indicates the possibility of two rate cuts this year still remains.

The monetary policy statement highlighted that “uncertainty regarding the economic outlook has increased,” with upward revisions to inflation forecasts and downward revisions to growth estimates for this year. The bank also indicated a slowdown in its pace of balance sheet reduction.

The statement noted that the unemployment rate has stabilized at a low level in recent months, and labor market conditions remain strong, with inflation still staying somewhat elevated.

Fed Chair Jerome Powell stated during a press conference that tariffs could delay progress in reducing inflation.

On the UK side, the BoE also kept the policy rate steady, aligning with market expectations.

The BoE’s announcement indicated that eight members, including BoE Governor Andrew Bailey, supported maintaining the policy rate at 4.5%, while one member favored a reduction to 4.25%.

The announcement mentioned significant progress during the deflationary phase over the last two years, allowing the bank to gradually loosen policy constraints while keeping the policy rate at a restrictive level to reduce permanent inflationary pressures.

Canada and Switzerland continued monetary easing

The BoC in Canada reduced the policy rate by 25 basis points to 2.75% in March.

The bank’s statement on monetary policy emphasized that the economic outlook continues to face unusually high uncertainty due to a rapidly changing policy environment.

The statement also noted, “Increasing trade tensions and tariffs imposed by the U.S. are expected to slow economic activity in Canada and heighten inflationary pressures.”

It was indicated that the Canadian economy is expected to slow due to the “trade conflict” in the first quarter of 2025, while recent surveys pointed to a sharp decline in consumer confidence and a slowdown in business expenditures due to postponed or canceled investments.

The bank underscored that the widespread uncertainty created by the U.S.’s continually changing tariff threats limits consumers’ spending plans and businesses’ hiring and investment plans.

In Switzerland, the SNB also cut the policy rate in line with forecasts by 25 basis points.

The SNB stated that the inflation outlook is closely monitored and indicated that “with this interest rate adjustment, the SNB aims to maintain favorable monetary conditions in light of low inflationary pressures and risks.”

This rate cut marked the fifth decision to lower rates by the bank since March 2024.

TCMB made a 250 basis point cut

Domestically, the TCMB’s Monetary Policy Committee (MPC) reduced the one-week repo auction rate by 250 basis points to 42.50% in March.

The TCMB announcement noted that after an increase in January, the underlying trend of inflation declined in February, stating:

“During this period, core goods inflation remained relatively low, while service inflation slowed following an increase specific to January. Domestic demand has been above expectations in the fourth quarter, supporting levels of declining inflation. Leading indicators suggest that this supportive outlook will continue in the first quarter of the year.”

The announcement pointed out that while inflation expectations and pricing behaviors show signs of improvement, risks persist concerning the disinflationary process. It stated that the decisive stance in monetary policy supports balancing domestic demand, a real appreciation of the Turkish lira, and improvements in inflation expectations to strengthen the disinflation process.

The TCMB’s next interest rate decision will be announced on April 17, 2025, Thursday.

BoJ maintained rates, CBR continues tight monetary policy

The Bank of Japan (BoJ) was among the banks that did not change monetary policy in March. The bank kept the policy rate at 0.50%, consistent with market expectations.

The policy statement indicated some weakness in the Japanese economy, but noted a moderate recovery and an upward trend in capital expenditures due to improvements in corporate profits.

The document noted a moderate increase in inflation expectations, suggesting the country’s economy may grow at a rate above its potential growth rate.

In Russia, the CBR kept the policy rate unchanged at 21% in line with forecasts, stating that while inflationary pressures have recently diminished, they remain high.

The announcement emphasized that growth in domestic demand is significantly outpacing the expansion in the supply of goods and services, and while credit activity is cooling, consumer spending remains strong.

It was stated that the tight monetary policy and cooling credit conditions are expected to make reaching the inflation target achievable by 2026.

Decisions from other central banks were also monitored

The Czech National Bank, which recently cut rates in February, kept the two-week repo rate unchanged at 3.75% in its March monetary policy decision.

In Hungary, the MNB maintained the policy rate unchanged at 6.50% in March, aligning with market expectations.

The bank’s announcement highlighted the need for a cautious and patient approach in monetary policy due to upward risks to inflation, trade policies, and geopolitical tensions, stating, “The uncertain international economic environment and inflation outlook necessitate continued tight monetary conditions.”

The National Bank of Poland also kept the policy rate steady at 5.75% in March, in line with forecasts.

The press announcement emphasized the uncertainties regarding the rising inflation’s effects on inflation expectations and wage pressures, noting that “core inflation is likely to remain high with a significant rise in domestic demand over the coming quarters.”

In Sweden, the Riksbank paused any reductions, keeping the policy rate at 2.25%.

The statement indicated that “the bank assesses that the policy rate will remain at this level for some time. Steps will be taken if required by the inflation and economic activity outlook.”

Additionally, the Norwegian Central Bank maintained the policy rate at 4.50% in March.