Weekly Buzz: What to do when central banks don’t move together

The Federal Reserve (Fed) made its final rate cut of the year last week. This week, three other central banks take their turn on the stage: the Bank of England (BoE), the European Central Bank (ECB), and the Bank of Japan (BoJ).

Going their separate ways

Traders expect the BoE to cut for the fourth time this year, bringing rates in the UK down by a quarter percentage point to 3.75%. The case is straightforward: GDP shrank in October while unemployment crept up to 5.1%. The ECB, meanwhile, looks set to hold rates at 2%. After a series of eight cuts, policymakers want to see whether prices stay contained as wage growth cools and demand softens.

On the other hand, the BoJ is expected to raise rates to 0.75%, the highest level in three decades. Tariff risks there have calmed while inflation for the country has run above 2% for over three years. The quarterly ‘tankan’ survey, released earlier this week, showed improving business sentiment and rising wages, which added to the case for tightening.

Swap markets now assign a higher probability of rate hikes than cuts next year for parts of Europe, Canada, and Australia. The US stands apart – traders expect at least two Fed cuts in 2026.

What does this mean for you?

Interest rates shape the price of money. Lower rates support borrowing, investment, and risk-taking. Higher rates rein in demand and help anchor inflation. Right now, those forces are pulling in different directions across regions, and this split affects everything from equity valuations and bond returns to currency moves and market sentiment.

When central banks move out of sync, concentrated bets become riskier. Portfolios built around a single economy rely on being right about policy, growth, and inflation all at once. A globally diversified portfolio spreads exposure across regions and cycles, allowing different parts to pull their weight. Over time, that balance matters more than guessing which central bank moves next.

(For a portfolio that invests across different regions, assets, and rate cycles, see General Investing.)

In Other News: China finds new buyers for its exports

China posted one of the largest trade surpluses in its history in November, pushing its year-to-date figure close to US$1 trillion. Exports rose nearly 6% from a year earlier, even as shipments to the US fell sharply under the weight of tariffs.

With access to the US constrained, Chinese exporters redirected goods toward Europe, Australia, and Southeast Asia, with exports to the EU alone jumping nearly 15% year-on-year. That shift helped lift China’s monthly trade surplus to around US$112 billion, one of the largest monthly gaps on record.

This workaround comes with limits. European manufacturers report mounting pressure from cheaper imports, while policymakers debate tougher trade measures to protect local industry. EU firms continue to diversify their supply chains, either by localising production in China or by shifting parts of it elsewhere.

China’s stronger exports are offsetting softer conditions at home. Beijing has pledged to support consumer spending and business investment next year, though recent policy signals point to modest steps rather than a decisive push.

Simply Finance: Trade surplus/deficit

A trade surplus means a country exports more than it imports, selling more goods and services to the rest of the world than it buys. When imports exceed exports, it runs a trade deficit. Neither outcome is inherently good or bad. A surplus can reflect strong manufacturing and export competitiveness, but it can also point to weak domestic consumption.