Why are some central banks raising rates and others holding them?

Why are some central banks raising rates and others holding them? The reasons behind their decisions reveal much about the state of the world economy IN 2025, financial markets expected the world’s major central banks to be moving towards lower interest rates. Today, a better question may be: Who is not raising them, and why?

First, some major banks have tightened policy: The European Central Bank (ECB) raised rates on Sep 10; the US Federal Reserve followed on Sep 16, lifting rates for the first time in three years; and the Bank of Japan (BOJ) hiked its policy rate to 1. 25 per cent, its highest in 31 years, on Friday (Sep 18). As for the others: the Bank of England (BOE) and Reserve Bank of India (RBI) held rates, and China is expected to stand still. But, while it is easy to separate the various central banks into two groups – those who hike and those who stand pat – the reasons behind their decisions are very different.