Global Interest Rates Update: What December 2025 Means for Your Money

keirafry2
Dec 17, 2025
2 min read

Quick Summary

Fed (US): Cut rates to 3.50–3.75%, signalling slower easing ahead.
Bank of England (UK): Inflation down to 3.2%, likely rate cut from 4% to 3.75% on Dec 18.
ECB (Eurozone): Holding steady at 2%, with talk of future hikes.

Why Are Rates Moving?

Central banks are reacting to inflation trends and growth signals, but their strategies differ:

US Federal Reserve:
- Delivered a 0.25% cut in December.
- Aims to support a cooling labour market while managing tariff-driven price pressures.
- Future cuts will be slower and data-dependent.
Bank of England:
- UK inflation fell to 3.2%, lowest since March.
- Markets expect a pre-Christmas cut to ease borrowing costs.
European Central Bank:
- Holding at 2%, citing resilience in eurozone growth.
- Some economists predict the next move could be a hike—but not soon.

How Does This Affect You?

Mortgages

US: 30-year mortgage rates around 6.12%, trending lower.
UK: Lenders already trimming fixed-rate deals ahead of BoE decision.
Eurozone: Stability for now, but watch for hawkish signals.

Savings

UK savers may see lower returns on easy-access accounts if BoE cuts.
US deposit rates will gradually decline as banks adjust.

Markets & Currency

Fed cuts vs ECB hold could weaken the US dollar against the euro.
UK equities may benefit from a BoE cut, while sterling could soften.

Practical Tips

Homeowners: Start comparing re-mortgage deals now—rates may fall further.
Savers: Consider laddering fixed-term accounts to stay flexible.
Investors: Watch central bank signals—they drive FX and sector trends.

Key Dates

Bank of England decision: 18 December 2025
ECB meeting: Mid-December
US data releases: Post-Fed meeting updates on jobs and inflation

Bottom Line

The global interest-rate landscape is shifting—but unevenly. For UK borrowers and savers, the coming BoE decision could mark the start of a gentler policy path. Meanwhile, the Fed is easing cautiously, and the ECB is standing firm.