The U.S. federal funds effective rate underwent a dramatic reduction in early 2020 in response to the COVID-19 pandemic. The rate plummeted from 1.58 percent in February 2020 to 0.65 percent in March, and further decreased to 0.05 percent in April. This sharp reduction, accompanied by the Federal Reserve's quantitative easing program, was implemented to stabilize the economy during the global health crisis. After maintaining historically low rates for nearly two years, the Federal Reserve began a series of rate hikes in early 2022, with the rate moving from 0.33 percent in April 2022 to 5.33 percent in August 2023. The rate remained unchanged for over a year, before the Federal Reserve initiated its first rate cut in nearly three years in September 2024, bringing the rate to 5.13 percent. By December 2024, the rate was cut to 4.48 percent, signaling a shift in monetary policy in the second half of 2024. The first rate cut in 2025 then set the rate at 4.33 percent. What is the federal funds effective rate? The U.S. federal funds effective rate determines the interest rate paid by depository institutions, such as banks and credit unions, that lend reserve balances to other depository institutions overnight. Changing the effective rate in times of crisis is a common way to stimulate the economy, as it has a significant impact on the whole economy, such as economic growth, employment, and inflation. Central bank policy rates The adjustment of interest rates in response to the COVID-19 pandemic was a coordinated global effort. In early 2020, central banks worldwide implemented aggressive monetary easing policies to combat the economic crisis. The U.S. Federal Reserve's dramatic reduction of its federal funds rate - from 1.58 percent in February 2020 to 0.05 percent by April - mirrored similar actions taken by central banks globally. While these low rates remained in place throughout 2021, mounting inflationary pressures led to a synchronized tightening cycle beginning in 2022, with central banks pushing rates to multi-year highs. By mid-2024, as inflation moderated across major economies, central banks began implementing their first rate cuts in several years, with the U.S. Federal Reserve, Bank of England, and European Central Bank all easing monetary policy.

The U.S. federal funds rate peaked in 2023 at its highest level since the 2007-08 financial crisis, reaching 5.33 percent by December 2023. A significant shift in monetary policy occurred in the second half of 2024, with the Federal Reserve implementing regular rate cuts. By December 2024, the rate had declined to 4.48 percent. What is a central bank rate? The federal funds rate determines the cost of overnight borrowing between banks, allowing them to maintain necessary cash reserves and ensure financial system liquidity. When this rate rises, banks become more inclined to hold rather than lend money, reducing the money supply. While this decreased lending slows economic activity, it helps control inflation by limiting the circulation of money in the economy. Historic perspective The federal funds rate historically follows cyclical patterns, falling during recessions and gradually rising during economic recoveries. Some central banks, notably the European Central Bank, went beyond traditional monetary policy by implementing both aggressive asset purchases and negative interest rates.

In June 2024, the European Central Bank (ECB) began reducing its fixed interest rate for the first time since 2016, implementing a series of cuts. The rate decreased from 4.5 percent to 3.15 percent by year-end: a 0.25 percentage point cut in June, followed by additional reductions in September, October, and December. The central bank implemented another cut in early 2025, setting the rate at 2.9 percent. This marked a significant shift from the previous rate hike cycle, which began in July 2022 when the ECB raised rates to 0.5 percent and subsequently increased them almost monthly, reaching 4.5 percent by December 2023 - the highest level since the 2007-2008 global financial crisis. How does this ensure liquidity? Banks typically hold only a fraction of their capital in cash, measured by metrics like the Tier 1 capital ratio. Since this ratio is low, banks prefer to allocate most of their capital to revenue-generating loans. When their cash reserves fall too low, banks borrow from the ECB to cover short-term liquidity needs. On the other hand, commercial banks can also deposit excess funds with the ECB at a lower interest rate. Reasons for fluctuations
The ECB’s primary mandate is to maintain price stability. The Euro area inflation rate is, in theory, the key indicator guiding the ECB's actions. When the fixed interest rate is lower, commercial banks are more likely to borrow from the ECB, increasing the money supply and, in turn, driving inflation higher. When inflation rises, the ECB increases the fixed interest rate, which slows borrowing and helps to reduce inflation.

As of January 2025, the Bank of Israel's declared interest rate was 4.5 percent. This was following the Bank's decision to reduce its declared rate by one quarter of a point in January 2024. Between April 2022 and December 2023, the country went through a period of rate hikes in an effort to curb inflation. During the observed period, interest rates in Israel peaked at 17 percent in December 1994 and July 1996. Following the global financial crisis between 2008 and 2011, rates were reduced to near-zero levels until March 2022.

In January 2025, global inflation rates and central bank interest rates showed significant variation across major economies. Most economies initiated interest rate cuts from mid-2024 due to declining inflationary pressures. The U.S., UK, and EU central banks followed a consistent pattern of regular rate reductions throughout late 2024. In early 2025, Russia maintained the highest interest rate at 21 percent, while Japan retained the lowest at 0.5 percent. Varied inflation rates across major economies The inflation landscape varies considerably among major economies. China had the lowest inflation rate at 0.5 percent in January 2025. In contrast, Russia maintained a high inflation rate of 9.9 percent. These figures align with broader trends observed in early 2025, where China had the lowest inflation rate among major developed and emerging economies, while Russia's rate remained the highest. Central bank responses and economic indicators Central banks globally implemented aggressive rate hikes throughout 2022-23 to combat inflation. The European Central Bank exemplified this trend, raising rates from 0 percent in January 2022 to 4.5 percent by September 2023. A coordinated shift among major central banks began in mid-2024, with the ECB, Bank of England, and Federal Reserve initiating rate cuts, with forecasts suggesting further cuts through 2025 and 2026.

December's freight volumes declined significantly, hinting at rising rates amid industry challenges, according to Cass Information Systems.

The inflation rate in the United States declined significantly between June 2022 and January 2025, despite rising inflationary pressures towards the end of 2024. The peak inflation rate was recorded in June 2022, at 9.1 percent. In August 2023, the Federal Reserve's interest rate hit its highest level during the observed period, at 5.33 percent, and remained unchanged until September 2024, when the Federal Reserve implemented its first rate cut since September 2021. By January 2025, the rate dropped to 4.33 percent, signalling a shift in monetary policy. What is the Federal Reserve interest rate? The Federal Reserve interest rate, or the federal funds rate, is the rate at which banks and credit unions lend to and borrow from each other. It is one of the Federal Reserve's key tools for maintaining strong employment rates, stable prices, and reasonable interest rates. The rate is determined by the Federal Reserve and adjusted eight times a year, though it can be changed through emergency meetings during times of crisis. The Fed doesn't directly control the interest rate but sets a target rate. It then uses open market operations to influence rates toward this target. Ways of measuring inflation Inflation is typically measured using several methods, with the most common being the Consumer Price Index (CPI). The CPI tracks the price of a fixed basket of goods and services over time, providing a measure of the price changes consumers face. At the end of 2023, the CPI in the United States was 158.11 percent, up from 153.12 a year earlier. A more business-focused measure is the producer price index (PPI), which represents the costs of firms.

As of December 2024, the inflation rate in the European Union was 2.7 percent, with prices rising fastest in Romania, which had an inflation rate of 5.5 percent. By contrast, both Ireland and Italy saw low inflation rates during the same period, with Ireland having the lowest inflation rate in the EU during this month. The rate of inflation in the EU in the October 2022 was higher than at any other time, with the peak prior to 2021 recorded in July 2008 when prices were growing by 4.4 percent year-on-year. Before the recent rises in inflation, price rises in the EU had been kept at relatively low levels, with the inflation rate remaining below three percent between January 2012 and August 2021. Rapid recovery and energy costs driving inflation The reopening of the European economy in 2021 following the sudden shock of COVID-19 in 2020 is behind many of the factors that have caused prices to rise so quickly in 2022. Global supply chains have not yet recovered from production issues, travel restrictions, and workforce problems brought about by the pandemic. Rising energy costs have only served to exacerbate supply problems, particularly with regard to the transport sector, which had the highest inflation rate of any sector in the EU in December 2021. High inflation rates mirrored in the U.S. The high inflation rates seen in Europe have been reflected in other parts of the world. In the United States, for example, the consumer price index reached a 40-year-high of seven percent in December 2021, influenced by many of the same factors driving European inflation. Nevertheless, it is hoped that once these supply chain issues ease, inflation levels will start to fall throughout the course of 2022.

Discover how U.S. new vehicle sales are anticipated to grow by 7.3% in December despite economic challenges, with insights on market trends and future outlook.

Consumer Price Index (CPI): Prev Dec=100: Services: SB: Irkutsk Region data was reported at 110.180 Prev Dec=100 in Dec 2024. This records an increase from the previous number of 109.540 Prev Dec=100 for Nov 2024. Consumer Price Index (CPI): Prev Dec=100: Services: SB: Irkutsk Region data is updated monthly, averaging 105.600 Prev Dec=100 from Jan 2002 (Median) to Dec 2024, with 276 observations. The data reached an all-time high of 135.900 Prev Dec=100 in Dec 2002 and a record low of 99.600 Prev Dec=100 in Jan 2020. Consumer Price Index (CPI): Prev Dec=100: Services: SB: Irkutsk Region data remains active status in CEIC and is reported by Federal State Statistics Service. The data is categorized under Russia Premium Database’s Inflation – Table RU.IB012: Consumer Price Index: Previous December=100: All Regions: Services.

August 2024 marked a significant shift in the UK's monetary policy, as it saw the first reduction in the official bank base interest rate since August 2023. This change came after a period of consistent rate hikes that began in late 2021. In a bid to minimize the economic effects of the COVID-19 pandemic, the Bank of England cut the official bank base rate in March 2020 to a record low of 0.1 percent. This historic low came just one week after the Bank of England cut rates from 0.75 percent to 0.25 percent in a bid to prevent mass job cuts in the United Kingdom. It remained at 0.1 percent until December 2021 and was increased to one percent in May 2022 and to 2.25 percent in October 2022. After that, the bank rate increased almost on a monthly basis, reaching 5.25 percent in August 2023. It wasn't until August 2024 that the first rate decrease since the previous year occurred, signaling a potential shift in monetary policy. Why do central banks adjust interest rates? Central banks, including the Bank of England, adjust interest rates to manage economic stability and control inflation. Their strategies involve a delicate balance between two main approaches. When central banks raise interest rates, their goal is to cool down an overheated economy. Higher rates curb excessive spending and borrowing, which helps to prevent runaway inflation. This approach is typically used when the economy is growing too quickly or when inflation is rising above desired levels. Conversely, when central banks lower interest rates, they aim to encourage borrowing and investment. This strategy is employed to stimulate economic growth during periods of slowdown or recession. Lower rates make it cheaper for businesses and individuals to borrow money, which can lead to increased spending and investment. This dual approach allows central banks to maintain a balance between promoting growth and controlling inflation, ensuring long-term economic stability. Additionally, adjusting interest rates can influence currency values, impacting international trade and investment flows, further underscoring their critical role in a nation's economic health. Recent interest rate trends Between 2021 and 2024, most advanced and emerging economies experienced a period of regular interest rate hikes. This trend was driven by several factors, including persistent supply chain disruptions, high energy prices, and robust demand pressures. These elements combined to create significant inflationary trends, prompting central banks to raise rates in an effort to temper spending and borrowing. However, in 2024, a shift began to occur in global monetary policy. The European Central Bank (ECB) was among the first major central banks to reverse this trend by cutting interest rates. This move signaled a change in approach aimed at addressing growing economic slowdowns and supporting growth.

Mortgage interest rates in Czechia have experienced significant fluctuations over the past few years, reaching a peak of nearly six percent in December 2022 before gradually declining. As of December 2024, the interest rate on new mortgages in the country amounted to 4.8 percent, showing a slight decrease from the previous month. This trend in mortgage rates has occurred alongside substantial increases in housing prices. Housing market dynamics The changes in mortgage rates have gone hand in hand with notable shifts in the Czech housing market. Despite the high-interest rates, new mortgage lending reached over 18.7 million Czech koruna in December 2024, marking a significant increase from the same month in the previous year. This growth in lending has continued despite the steady rise in housing prices, with the house price index reaching 219.9 in the third quarter of 2024. This marks a significant increase from the 2015 baseline, reflecting the ongoing upward trend. The average purchase price per square meter for family houses increasing across the country. In 2023, Prague recorded the highest average price at 111,087 Czech koruna per square meter. Construction sector trends The construction sector in Czechia has shown its response to these market conditions. The index of multi-dwelling building construction fluctuated recently, with 2024 showing a slight decrease to 83.8 index points compared to the previous year. However, regarding non-residential buildings, the construction has been continuously growing since 2018 with hotels and industrial buildings accounting for the majority of new non-residential constructions.

Georgia Consumer Price Index (CPI): Previous December=100: Health data was reported at 102.200 Prev Dec=100 in Sep 2018. This records an increase from the previous number of 101.600 Prev Dec=100 for Aug 2018. Georgia Consumer Price Index (CPI): Previous December=100: Health data is updated monthly, averaging 102.169 Prev Dec=100 from Jan 2004 (Median) to Sep 2018, with 177 observations. The data reached an all-time high of 121.460 Prev Dec=100 in Dec 2008 and a record low of 92.600 Prev Dec=100 in Sep 2013. Georgia Consumer Price Index (CPI): Previous December=100: Health data remains active status in CEIC and is reported by National Statistics Office of Georgia. The data is categorized under Global Database’s Georgia – Table GE.I008: Consumer Price Index: Previous December=100.

Consumer Price Index (CPI): Prev Dec=100: Services: CF: Kaluga Region data was reported at 112.210 Prev Dec=100 in Dec 2024. This records an increase from the previous number of 110.800 Prev Dec=100 for Oct 2024. Consumer Price Index (CPI): Prev Dec=100: Services: CF: Kaluga Region data is updated monthly, averaging 106.430 Prev Dec=100 from Jan 2002 (Median) to Dec 2024, with 275 observations. The data reached an all-time high of 150.700 Prev Dec=100 in Dec 2002 and a record low of 100.050 Prev Dec=100 in May 2016. Consumer Price Index (CPI): Prev Dec=100: Services: CF: Kaluga Region data remains active status in CEIC and is reported by Federal State Statistics Service. The data is categorized under Russia Premium Database’s Inflation – Table RU.IB012: Consumer Price Index: Previous December=100: All Regions: Services.

Mortgage rates increased at a record pace in 2022, with the 10-year fixed mortgage rate doubling between March 2022 and December 2022. With inflation increasing, the Bank of England introduced several bank rate hikes, resulting in higher mortgage rates. In September 2023, the average 10-year fixed rate interest rate reached 5.1 percent. As borrowing costs get higher, demand for housing is expected to decrease, leading to declining market sentiment and slower house price growth. How have the mortgage hikes affected the market? After surging in 2021, the number of residential properties sold declined in 2022, reaching close to 1.3 million. Despite the number of transactions falling, this figure was higher than the period before the COVID-10 pandemic. The falling transaction volume also impacted mortgage borrowing. Between the first quarter of 2023 and the first quarter of 2024, the value of new mortgage loans fell year-on-year for fourth straight quarters in a row. How are higher mortgages affecting homebuyers? Homeowners with a mortgage loan usually lock in a fixed rate deal for two to ten years, meaning that after this period runs out, they need to renegotiate the terms of the loan. Many of the mortgages outstanding were taken out during the period of record-low mortgage rates and have since faced notable increases in their monthly repayment. About five million homeowners are projected to see their deal expire by the end of 2026. About two million of these loans are projected to experience a monthly payment increase of up to 199 British pounds by 2026.

In December 2022, the price of lead ore was $3,673 per ton (FOB, Mexico), an increase of 4.1% from the previous month.

Between January 2018 and January 2025, Germany's inflation rate experienced significant volatility. Initially fluctuating between 0.3 and 3.1 percent, the rate escalated dramatically, reaching a peak of 10.4 percent in October 2022. By September 2024, the inflation rate had moderated to 1.6 percent. However, inflation began rising again towards the end of 2024, standing at 2.6 percent in December. The European Central Bank (ECB) responded to these inflationary pressures with a series of interest rate adjustments. After maintaining historically low rates, the ECB initiated its first rate hike since March 2016 in July 2022, raising the rate to 0.5 percent. The interest rate continued to increase, stabilizing at 4.5 percent from September 2023 to June 2024. In a notable shift, June 2024 marked the first rate cut during this period. It was followed by a series of rate cuts until the end of the year, with the last cut in 2024 setting the rate at 3.15 percent.

In December 2022, the price of sorbitol was $1,324 per ton (CIF, Germany), representing an increase of 6.7% compared to the previous month.

In January 2025, the Consumer Price Index including owner occupiers' housing costs (CPIH) inflation rate of the United Kingdom was 3.9 percent, unchanged from the previous month. The inflation rate fell noticeably after the COVID-19 pandemic, but rose sharply between Spring 2021 and Autumn 2022. After peaking at 9.6 percent in October 2022, CPIH inflation declined throughout 2023 and into 2024, falling to 2.6 percent by September of that year, before increasing again in recent months. Cost of living problems persist into 2025 Although it is likely that the worst of the recent inflation surge may have passed, the issues caused by it look set to linger into 2025 and beyond. While the share of households experiencing living cost rises has fallen from 91 percent in August 2022, to 45 percent in July 2024, this share rose towards the end of the year, with more than half of households reporting rising costs in December. Even with lower inflation, overall consumer prices have already increased by around 20 percent in the last three years, rising to almost 30 percent for food prices, which lower income households typically spend more of their income on. The significant increase in people relying on food banks across the UK, is evidence of the magnitude of this problem, with approximately 3.12 million people using food banks in 2023/24. Other measure of inflation While the CPIH inflation rate displayed here is the preferred index of the UK's Office of National Statistics, the Consumer Price Index (CPI) is often more prominently featured in the media in general. An older index, the Retail Price Index (RPI) is also still used by the government to calculate certain taxes, and rail fare rises. Other metrics include the core inflation rate, which measures prices increases without the volatility of food and energy costs, while price increases in goods and services can also be tracked separately. The inflation rate of individual sectors can also be measured, and as of December 2024, prices were rising fastest in the communications sector, at 6.1 percent, with costs falling in the transport and furniture sectors.

Consumer Price Index (CPI): Prev Dec=100: Food: UF: Tumen Region: Tumen Region excl Areas data was reported at 107.590 Prev Dec=100 in Dec 2024. This records an increase from the previous number of 102.990 Prev Dec=100 for Oct 2024. Consumer Price Index (CPI): Prev Dec=100: Food: UF: Tumen Region: Tumen Region excl Areas data is updated monthly, averaging 103.030 Prev Dec=100 from Dec 2013 (Median) to Dec 2024, with 132 observations. The data reached an all-time high of 115.470 Prev Dec=100 in Dec 2015 and a record low of 100.100 Prev Dec=100 in Sep 2018. Consumer Price Index (CPI): Prev Dec=100: Food: UF: Tumen Region: Tumen Region excl Areas data remains active status in CEIC and is reported by Federal State Statistics Service. The data is categorized under Russia Premium Database’s Inflation – Table RU.IB010: Consumer Price Index: Previous December=100: All Regions: Food.