FX NOW! THE WEEK AHEAD – An FX compass in Central Bank Weeks (16.06.2025)

Central Bank Meetings:

⚪ Japan 17.06.2025

Expected: 0.50% (Unchanged // Probability: 99%)

Japan’s real GDP is projected to grow by approximately 1.2% in fiscal year 2025, driven by robust domestic demand, particularly private consumption and business investment. This marks an improvement from the 0.5% growth in 2024. Inflation is expected to stabilize around 2%, aligning with the Bank of Japan’s target. With wages expected to grow by some 5% thus outpacing inflation, private consumption is projected to grow by 1.3% in a healthy economic environment. With the BoJ expected to hike once only again in 2025, anything but an unchanged rate at 0.25% for the upcoming meeting would be a big surprise.

⚪ SWEDEN 18.06.2025

Expected 2.00% (Cut by 25bp // Probability: 80%)

Sweden’s economic outlook for 2025 reflects a cautious recovery following a challenging period marked by high inflation and elevated unemployment. The Swedish economy is projected to grow by 1.8% in 2025, following a modest 0.3% expansion in 2024. Inflation seems to be in check at 1.5% but the unemployment rate is forecasted to decrease only slightly to 8.4% in 2025. With inflation at bay and high unemployment a rate cut of 25bp is expected for the meeting on June 18^th.

⚪ USA 18.06.2025

Expected: 4.50% (Unchanged // Probability: 96%)

The U.S. economy is projected to expand by approximately 2.3% in 2025, following a 2.8% growth in 2024. Inflation is anticipated to gradually ease, with the Consumer Price Index (CPI) expected to decline from 3.0% in January 2025 to around 2.5% by year-end. The unemployment rate is projected to hover just above 4%, indicating a moderately tight labor market yet at very low levels, historically. Amid major geopolitical and economic risks on the horizon, the Fed’s interest rate is expected to stay put at 4.50% with two hikes remaining in the cards for 2025.

⚪ SWITZERLAND 19.06.2025

Expected 0.00% (Cut by 25bp // Probability: >99%)

A strong CHF is a major concern for the Swiss economy. Overall, Switzerland’s economic outlook for 2025 reflects a cautious trajectory, influenced by global trade tensions, a strong Swiss franc, and subdued domestic demand. The numbers for the Swiss economy are impressive: CPI at 0.3%, GDP growth at 1.1% and unemployment at 2.8% sounds like a healthy economy but deflation looms amid the strong CHF. As Switzerland experienced a negative annual inflation rate of -0.1% in May 2025, its first dip into deflation in four years, the SNB is very likely to cut its rate by at least 25bp this week.

⚪ NORWAY 19.06.2025

Expected 4.50% (Unchanged // Probability: >92%)

Norway continues its path by maintaining staggering budget surplus with an expected 12.5% for 2025. For 2025 GDP growth is set to reach 1.3%, with CPI at 2.7% and an unemployment rate of 4.0%. With geopolitical tensions on the rise, a rise in oil prices may play into the cards of the oil heavy weight. Amid this overall healthy economic environment, the Norges Bank is expected to cut interest rates maybe once towards the end of 2025 but is in no hurry to do so currently given the relatively high inflation number.

⚪ UK 19.06.2025

Expected 4.25% (Unchanged // Probability: 93%)

The UK economy in 2025 is navigating a complex landscape characterized by modest growth, persistent inflation. With inflation expected at 3.1% for 2025 and expected GDP growth for 2025 of only 1.1%, and a Budget deficit for 2025 of -4.1% the Bank of England faces a challenging set of circumstances to cope with. While two rate cuts are expected for 2025, the Bank of England is likely to stay on hold for the current meeting but may potentially cut rates in its August meeting.