FX NOW! THE WEEK AHEAD – An FX compass in Central Bank Weeks (08.12.2025)

Central Bank Meetings:

⚪ AUSTRALIA 09.12.2025

Expected: 3.60% (Unchanged // Probability: 98%)

Australia faces a mixed outlook heading into 2026. According to the Reserve Bank of Australia (RBA), real GDP is projected to grow around 1.8% in 2025, then rise to roughly 1.9–2.0% in 2026. For inflation, the RBA noted that “underlying inflation” had moderated: headline inflation in 2024 was 2.4% and trimmed-mean inflation fell to around 3.2%. The baseline scenario envisages inflation gradually returning toward the middle of its 2–3% target by end-2026, assuming a stable policy environment. The unemployment rate is expected to drift upward moderately: from about 4.2% in mid-2025 to roughly 4.4% in 2026, where it is projected to remain for the moment. As of late 2025, the RBA has held the cash rate at around 3.6% after having cut rates three times earlier in the year. Given the mixed signals of modest growth but sticky inflation and rising demand, the market expects the RBA not to change the target rate this time around.

⚪ CANADA 10.12.2025

Expected 2.25% (Unchanged // Probability: 95%)

Canada’s economy is expected to grow slower than expected earlier in 2025: The Parliamentary Budget Officer (PBO) in its September 2025 outlook projects real GDP growth of 1.2 % in 2025 and 1.3 % in 2026. The Bank of Canada (BoC)’s October 2025 Monetary Policy Report likewise expects growth to be subdued, with annual growth flattening toward about 1.1–1.2 % in 2025–2026 before gradually improving in later years. For price levels, headline inflation (CPI) was about 2.4 %, while underlying (“core”) inflation remained sticky, with broader measures still near 2.5%. Over the medium term, the BoC projects inflation to stay “around 2%. A more dire picture is presented with respect to employment: The national unemployment rate rose to 7.1 % in August 2025, up 0.2 percentage points compared with the prior month – the highest level outside of pandemic years since 2016. Given tepid growth, sticky underlying inflation, and rising joblessness, the BoC’s policy direction remains cautious with many analysts expecting that rate-cuts may pause unless labour-market or price pressures worsen further.

⚪ USA 10.12.2025

Expected: 3.75% (cut by 25bp // Probability: 92%)

According to the Federal Reserve (Fed)’s March 2025 projections, real GDP is expected to grow by 1.7% in 2025, and some 1.8% in 2026. Some other analysts are a bit more cautious or somewhat similar in their forecasts. For instance, the ratings agency S&P Global Ratings forecasts 1.7% growth in 2025 and around 1.6% in 2026. Underlying price pressures remain a concern: ongoing tariffs, supply-chain effects, and resilient consumer demand all contribute to “sticky” inflation dynamics, which could keep inflation above the Fed’s 2% target over the near term. Recent forecasts expect core PCE inflation to peak at 3.0% at the end of 2025, then moderate to 2.6% during 2026. Many forecasters expect the unemployment rate to edge up moderately: the Philadelphia Fed Q3 2025 survey projects an annual average of 4.2% in 2025, rising to 4.5% in 2026, before slowly declining again. Given weakening labour-market signals and persistent inflation (especially core PCE), many economists and market participants expect a rate cut this December with further rate cuts in 2026 to support activity.

⚪ SWITZERLAND 11.12.2025

Expected 0.00% (Unchanged // Probability: >93%)

The official projections from SECO (Expert Group on Business Cycles) as per June 2025 expect real GDP growth of about 1.3 % in 2025 and 1.2% in 2026. This is somewhat lower than their March forecasts of 1.4% and 1.6% respectively. Inflation in Switzerland is expected to remain low: the forecast for 2025 is around 0.1–0.2 %. The latest print (Dec 3^rd) YoY came out at 0.0% with a MoM deflationary reading of -0.2%. According to official data from State Secretariat for Economic Affairs (SECO), the unemployment rate stayed moderate at 2.9% in November 2025. The near-zero inflation and downside risks to growth have led the Swiss National Bank (SNB) to keep its policy rate at 0% (as of late 2025). Key risks to the outlook remain elevated: global trade tensions (notably US-tariffs), weak external demand, a strong franc, and volatility in global markets may weigh on Swiss exports, industrial production, investment, and growth. On the positive side, household consumption and domestic demand – supported by low inflation and stable interest rates – may cushion the economy somewhat.