Central Banks Cautious as Inflation Eases and Growth Momentum Softens (December 15 – 19, 2025, Recap)

Last week’s review covers the key economic data releases, central bank decisions, and market movements that shaped global financial markets. Inflation updates, business activity surveys, labour market data, and monetary policy decisions drove currency moves, while commodities, equities, and corporate earnings reflected shifting growth and inflation expectations across major economies.

Major Economic Indicators and Events in Review

Monday, December 15

15:30 – Canada: CPI m/m (CAD)

Inflation was steady in November, with consumer prices rising 2.2% from a year earlier, unchanged from October. Price increases for services such as travel, accommodation, and rent slowed, helping to ease overall inflation. This was partly offset by higher grocery prices and a smaller decline in gasoline prices. Excluding gasoline, prices were up 2.6% year over year for the third straight month. On a monthly basis, prices rose only slightly, increasing 0.1% overall, or 0.2% after seasonal adjustment.

The USDCAD ticked higher by 0.01% on the day.

Tuesday, December 16

10:30 am – Germany: Flash PMI (EUR)

Germany’s business activity continued to expand in December, but the pace of growth slowed for the second month in a row, according to the HCOB PMI survey. Weaker demand weighed on new orders, particularly in manufacturing, and business confidence fell to an eight-month low.

The services sector still grew, though more slowly, while manufacturing slipped back into contraction. Employment edged lower again, and cost pressures increased, with higher service prices and the first rise in manufacturing input costs in nearly three years due to supply-chain strains.

The EURUSD fell by 0.028% on the day.

11:30 am – UK: Flash PMI (GBP)

UK business activity picked up in December, with growth improving to a two-month high, according to the latest S&P Global flash PMI survey. The improvement was driven by the strongest rise in new business in over a year, especially in the services sector, while manufacturing also showed its best performance in more than a year.

Despite stronger demand, companies continued to cut jobs for the fifteenth month in a row, mainly due to high costs. Inflation pressures also increased, with firms reporting faster rises in wages, fuel, and other expenses, which led to higher prices being passed on to customers. Overall, the data suggest modest economic growth at the end of the year, but with ongoing pressure on employment and costs.

The GBPUSD rose by 0.38% on the day.

15:30 – USA: Nonfarm Employment Change (USD)

The US job market showed little change in November, according to the US Bureau of Labor Statistics. Employers added about 64,000 jobs, continuing a slow trend that has been in place since spring. The unemployment rate held steady at 4.6%, though it was higher than a year ago.

Job growth was concentrated in health care and construction, while federal government employment continued to fall. Overall, hiring was weak across most other industries. Wages rose only slightly during the month, though pay was still about 3.5% higher than a year earlier. The data point to a labor market that is stable but losing momentum, with limited job growth and ongoing pressure in some sectors.

The USDJPY fell by 0.29% on the day.

16:45 – USA: Flash PMI (USD)

US business activity continued to grow in December, but at a slower pace than in previous months, according to the latest S&P Global flash PMI survey. Growth slowed to a six-month low as new orders weakened, with demand for services rising only modestly and factory orders falling for the first time in a year.

At the same time, price pressure jumped sharply. Companies reported the fastest rise in costs in more than three years, largely blamed on tariffs and higher labor expenses, and many passed these costs on to customers through higher prices. Hiring also cooled, especially in services, pointing to an economy that is still expanding but losing momentum while inflation pressures intensify.

The AUDUSD fell by 0.09% on the day.

Wednesday, December 17

09:00 am – UK: CPI y/y (GBP)

UK inflation eased in November, with overall price pressures slowing compared with October. CPIH, the broader inflation measure that includes housing costs, rose 3.5% from a year earlier, down from 3.8%, while CPI, the main inflation rate, fell to 3.2% from 3.6%. Prices also dipped slightly on the month, suggesting inflation momentum is cooling compared with the same period last year.

The GBPUSD fell by 0.34% on the day.

09:00 am – New Zealand: GDP q/q (NZD)

Economic activity rebounded in the September 2025 quarter, with the economy growing by 1.1% after shrinking in the previous quarter. Despite this quarterly improvement, the economy was still 0.5% smaller than it was a year earlier. Spending across the economy also picked up during the quarter, rising 1.3%, but remained slightly lower compared with the same period last year, showing that the recovery is still uneven.

The NZDUSD fell by 0.21% on the day.

Thursday, December 18

14:00 – UK: Official Bank Rate (GBP)

The Bank of England cut interest rates in December, lowering the Bank Rate by 0.25 percentage points to 3.75%, after a close vote among policymakers. Inflation has eased to 3.2% and is expected to fall closer to the 2% target as wage growth and service-sector prices continue to slow.

Policymakers said the economy is growing weakly and the job market is cooling, which reduces the risk of inflation staying high. While further interest rate cuts are likely over time, they are expected to happen gradually, and future decisions will depend closely on how inflation and demand evolve.

Following the rate decision, GBPUSD was little changed on the day.

15:15 – Europe: Main Refinancing Rate (EUR)

The European Central Bank kept interest rates unchanged in December, saying inflation is still on track to settle around its 2% target over the coming years. Inflation is expected to average just above 2% in 2025 before easing slightly and then stabilizing at the target later in the decade.

The ECB also sees the euro area economy growing a bit faster than previously expected, mainly supported by stronger domestic demand. Policymakers stressed that future rate decisions will depend on incoming data and inflation trends, with no fixed plan for when rates might change.

The EURUSD fell by 0.15% on the day.

Friday, December 19

Tentative – Japan: BOJ Policy Rate (JPY)

The Bank of Japan raised its key policy rate, guiding short-term interest rates to 0.75%. The central bank said Japan’s economy is recovering steadily, wages and prices are rising, and inflation is increasingly likely to move toward its 2% target, allowing it to gradually reduce monetary stimulus.

The USDJPY rose 1.33% on the day.

09:00 am – UK: Retail Sales m/m (GBP)

Retail sales showed modest improvement overall, with the amount of goods bought rising 0.6% over the three months to November. Strong demand for clothing, electronics, and furniture supported growth. However, sales slipped slightly in November itself, falling 0.1%, as online sales eased and supermarket sales declined for a fourth straight month, showing that consumer spending remains uneven.

The GBPUSD fell by 0.033% on the day.

Commodities

1. Crude Oil
   Crude oil prices decreased by 1.72% over the past week
2. Brent Oil
   Brent was down 1.06% compared to the previous week
3. Gold
   The precious metal Gold (XAUUSD) concluded the week on Friday with a 0.92% weekly increase
4. Silver
   XAGUSD increased by 8.48% from last week

Stock Market

1. S&P 500 increased by 0.14%
2. DJIA was down 0.70%
3. NASDAQ 100 increased by 0.69%

Top Gainers

1. AMC Robotics Corporation (AMCI) 256.46%
2. NovaBay Pharmaceuticals, Inc. (NBY) 89.29%
3. Athira Pharma, Inc. (ATHA) 80.10%

Top Losers

1. iRobot Corporation (IRBT) -89.20%
2. Smart Digital Group Limited (SDM) -86.60%
3. Vistagen Therapeutics, Inc. (VTGN) -81.70%

Company Earnings (December 15 – 19)

Wednesday, December 17: MU (Micron Technology, Inc.)

Thursday, December 18: NKE (NIKE, Inc.)

Thursday, December 18: GIS (General Mills, Inc.)

Micron Technology reported record revenue and profits and expects even stronger results next quarter, driven by tight supply and strong demand for memory used in AI. The company raised investment plans to boost production, said its 2026 high-bandwidth memory supply is already fully sold, and expects memory shortages and strong pricing to continue through at least 2026.

MU shares surged 10.28% over the past week.

Nike shares fell after the company warned that sharply weaker sales in China and higher tariffs are hurting profits, even though overall earnings beat expectations. Investors were concerned that problems in China could slow Nike’s recovery despite solid demand in North America.

NKE shares fell 12.98% over the past week.

General Mills reported quarterly earnings that beat expectations, even though profits and sales were lower than a year ago. Despite the earnings beat, the stock is still down sharply this year, reflecting investor concerns about slower growth and the broader food industry outlook.

GIS shares rose 2.51% over the past week.

Conclusion

Overall, last week’s data reinforced the picture of easing inflation but uneven economic momentum across major economies. Central banks continued to move cautiously, balancing cooling price pressures against slowing growth and softer labour markets. Markets reflected this mixed backdrop, with modest moves in currencies and equities, divergent commodity performance, and company earnings highlighting both areas of resilience and ongoing challenges as the year draws to a close.