FX NOW! THE WEEK AHEAD – An FX compass in Central Bank Weeks (15.09.2025)

Central Bank Meetings:

⚪ Canada 17.09.2025

Expected: 2.50% (Cut by 25bp // Probability: 83%)

Canada’s economy is expected to grow by approximately 1.8% in 2025, according to the Bank of Canada, down from earlier forecasts of over 2%. Meanwhile, the Parliamentary Budget Officer assumes a stronger pace nearer 2.2%, while the OECD projects a more modest 1% as trade tensions weigh on growth. Inflation is projected to average between 1.7% and 2.3%, depending on the source, suggesting a gradual easing toward—but not yet fully reaching—the Bank’s 2% target. The unemployment rate has risen sharply, reaching 7.1% in August 2025, driven by widespread job losses, particularly in part-time and services roles; youth unemployment remains especially high at 14.5%. Earlier in the year, job reductions contributed to rising jobless levels. Facing these challenges, the BoC is expected to lower its policy rate by 25bp.

⚪ USA 17.09.2025

Expected 4.25% (Cut by 25bp // Probability: 99%)

The U.S. economy is now expected to grow by approximately 1.7–2.7% in 2025, depending on the forecast—ranging from conservative projections by the Federal Reserve and CBO (~1.7–1.9%) to more optimistic forecasts by the IMF (~2.7%). Inflation is anticipated to gradually ease, with the inflation rate (PCE) expected to decline from about 2.5% in 2024 to 2.2–2.7% in 2025, as monetary conditions tighten but slow disinflation persists. Unemployment is projected to rise slightly above 4%, reaching around 4.3–4.4% by the end of 2025, indicating a mildly looser—but still healthy—labor market. The Federal Reserve is expected to reduce interest rates by about 0.5 percentage point this year—bringing the federal funds rate from its current level around 4.25–4.5% down to approximately 3.65% by year-end. For the next meeting anything but a 25bp cut would be a big surprise.

⚪ UK 18.09.2025

Expected: 4.00% (Unchanged // Probability: 98%)

The UK economy is expected to grow by approximately 1.0–1.3% in 2025, depending on the forecasting model—around 1.0% according to the OBR and EY, with the CBI and BCC offering slightly more optimistic projections up to 1.3%. Inflation remains stubbornly high, with 2025 CPI expected to average between 3.2% and 3.7%, before gradually easing to the Bank of England’s 2% target by 2027. The unemployment rate is forecast to creep higher, settling between 4.7% and 5.0% by year-end, indicating a mildly softer jobs environment. Though monetary policy is shifting toward stimulation with the Bank Rate recently cut to 4.0% the market does not expect a further cut in the upcoming meeting.

⚪ NORWAY 18.09.2025

Expected 4.00% (Cut by 25bp // Probability: 75%)

Norway’s economy is set for modest growth in 2025, with mainland GDP projected to expand between 1.5% and 1.8%, though total GDP may remain flat or slightly contract due to oil sector shifts. Inflation is easing, expected to moderate to around 2.8%, while wage growth, though slowing to 4–4.5%, continues to support real incomes. The labour market remains solid, with unemployment expected to stabilize around 4%–4.3%—a level consistent with current data. Monetary policy is gradually easing, and a cut of 25bp is well in the cards for this week.

⚪ JAPAN 19.09.2025

Expected 0.50% (Unchanged // Probability: 75%)

Japan’s real GDP is now projected to grow by about 0.7% in fiscal year 2025 (April 2025 to March 2026), a downward revision from the earlier 1.2% estimate, reflecting challenges from U.S. tariffs and slowing external demand. In contrast, the economy delivered strong performance in Q2 2025, with GDP expanding at a 2.2% annualized rate, driven by robust private consumption. Inflation remains elevated, with consumer prices up 3.6% in July, significantly above the Bank of Japan’s 2% target. However, nominal wages are expected to grow by 2.8% in FY 2025, outpacing inflation as it stabilizes toward 2%. Real wages turned positive, rising 0.5% in July for the first time in seven months. Household spending also shows tentative improvement, with July outlays up 1.4% year-on-year, though still below expectations. With this bag of mixed data, the BoJ is expected to hold rates steady.