Economic Analysis

6 February

9 - 13 February

Economic analysis subscription

Historic FX & Interest Rates for 2025

The manu. PMI eased to 52.2 in Dec. Output and new orders expanded, albeit at a slower pace. Business expectations remained optimistic but the level of confidence fell slightly Traditional industrial production rose by 7.0% in the 3mths to Nov, and it was 4.4% higher YoY

The first ECB Governing Council policy setting meeting of 2026 saw the central bank leave interest rates on hold.
The deposit and refi rates were maintained at 2.00% and 2.15%, respectively. This outcome was very much in line with market expectations. Its marks the fifth consecutive meeting that the central bank has left its official rates unaltered. The last time the ECB eased policy was last June when it cut rates by 25bps. In total, the central bank cut rates by 200bps during its easing cycle.

The first policy setting meeting of the year of the Bank of England’s Monetary Policy Committee (MPC), saw the central bank leave the Bank Rate unchanged today, at 3.75%.
This outcome was very much in line with market expectations.
The most recent rate cut from the BoE occurred at its previous meeting in December, when it lowered the Bank Rate by 25bps. This represented the fourth 25bps rate cut from the BoE last year. So far in its current easing cycle, which began in August 2024, the BoE has lowered rates by 150bps in total.

The Irish residential property market remains defined by tight supply as 2025 draws to a close. However, over the course of the year, there have been some encouraging signs in the supply dynamics, albeit the outlook remains challenging. 

The first Federal Reserve Open Market Committee (FOMC) meeting of 2026 saw the central bank leave interest rates unchanged. The target range for the Fed funds rate was maintained at 3.50–3.75%. The decision to leave rates unaltered was very much in line with market expectations. There were two dovish dissenters at the January FOMC (Miran and Waller), who voted for a 25bps rate cut. The most recent rate change from the Fed occurred at its previous meeting in December, when it cut by 25bps. This represented the third 25bps rate cut of the year. So far, in its current easing cycle, which began in September 2024, the Fed has cut rates by a total of 175%.

Global economy has proven to be robust in 2025 despite ongoing geopolitical uncertainty.US growth increasingly imbalanced toward AI investment, with the consumer and labour market weakening. Fed and Bank of England set for further cuts as the ECB sits on the sidelines. Bank of Japan pivoting towards a hawkish stance. Dollar set for weakest year since early 2000s but currency has regained some lost ground during Q4 2025 and further modest upside for euro, while sterling could remain on the defensive amid a challenging macro environment.

This Budget is set against an uncertain economic backdrop so far this year. GDP growth was robust in the early part of the year but has since moderated. The Chancellor had committed to not raising taxes materially further following last year’s hikes to national insurance (NI) on employer contributions, which among other measures raised £40bn. While the tax rises are largely to fill the hole in the fiscal rules, there are also net spending increases in the budget.