The original script for global central banks in 2025 was to cut interest rates uniformly. However, by the end of the year, there was a 180-degree turn—most central banks started to brake, with only the Bank of Japan raising interest rates against the trend.

Earlier this year, the Reserve Bank of New Zealand took the lead in cutting rates, followed closely by major economies like the Federal Reserve, the European Central Bank, and the Bank of England. The market and its upstream and downstream sectors have been enjoying the benefits of easing. Looking back post-crisis, this round of rate cuts has been indeed rare, with emerging markets experiencing a cumulative reduction of over 3000 basis points.

But by year's end, the sentiment changed completely. Most central banks began to brake—after the ECB cut rates mid-year, it directly locked its deposit rate at 2.0%, and countries like Norway, Sweden, and Switzerland also chose to hold steady. Although the Federal Reserve cut another 25 basis points (bringing rates to the 3.5%-3.75% range), internal disagreements were evident, and plans for rate cuts in 2026 became much more cautious. The Bank of England made smaller cuts and adopted a firmer tone. Canada and Australia, after completing their rate-cut cycles, simply laid down their hands.

The most striking is the Bank of Japan. While the world is releasing liquidity, it took the opposite approach—raising interest rates by 25 basis points in December, pushing the rate to 0.75%, the highest in 30 years. Governor Ueda Shintaro also explicitly stated that as long as the economic fundamentals and inflation data continue to improve, further rate hikes will follow.

How will this policy shift affect the investment landscape in 2026? The probability of the US dollar and the British pound coming under pressure is quite high, as the easing expectations have already been set. Conversely, the yen and Japanese assets might have a chance to rebound, at least in terms of exchange rates and valuations. Traditional safe-haven assets like gold are still likely to be favored in the face of uncertainty.