In case you missed the post here last week: What’s the next step for major central banks in 2025?

January will feature a couple of major central bank decisions, namely the Fed, ECB, BOJ, and BOC. As things stand, traders are pricing in no change for the Fed while the ECB and BOC are expected to cut rates by 25 bps. As for the BOJ, traders are leaning slightly more towards them leaving rates unchanged (~59%) as opposed to a 25 bps rate hike (~41%). That said, it does mean that traders have priced in around 10 bps worth of a rate hike – at least in the OIS market.

Besides the BOJ, the policy decisions elsewhere should be relatively straightforward. And even if you want to argue that the BOJ might have the propensity to surprise, one can argue that Ueda already tried to tone that down last month. In any case, the meeting decision will only come on 24 January and one can reasonably expect there to be leaks in the week before. So, that’ll settle things in terms of BOJ expectations.

The Fed will remain the most interesting among the bunch, not in terms of what they will do in January. But instead of how their outlook might evolve through the course of the year. With Trump looking over Powell’s shoulders as well, it will add more intrigue for sure. Currently, Fed funds futures are showing ~45 bps of rate cuts priced in with the first full rate cut only priced in for June.

This article was written by Justin Low at www.forexlive.com.