Weekly Market Recap: SEP 14-19, 2025

Last week, global markets were dominated by central bank decisions and key economic data releases, with the FOMC meeting at the center of investor focus. The Federal Reserve cut rates by the expected 25bps, largely priced into the market, but attention quickly turned to the Summary of Economic Projections (SEP), which signaled a more dovish tone.
Alongside the U.S., central bank announcements from the Bank of England (BoE), Bank of Japan (BoJ), and Bank of Canada (BoC), as well as data on inflation, employment, and retail sales, shaped market sentiment across equities, currencies, and commodities.

Table of Contents

1. FOMC and U.S. Economic Outlook
2. Bank of England: Steady Rates with Dovish Signals
3. Bank of Japan Maintains Neutral Policy Amid Inflation Risks
4. Bank of Canada: Slight Rate Cut, Inflation Moderating
5. Global Inflation and GDP Updates
6. Retail Sales Highlights
7. Market Implications and Takeaways

FOMC and U.S. Economic Outlook

The FOMC meeting last week confirmed a 25bps rate cut, which was largely anticipated by markets. However, investors focused on the Summary of Economic Projections, which painted a more dovish outlook.
The Fed now expects interest rates to fall to 3.6% in 2025, down from the previous projection of 3.9%, while the unemployment rate is projected to peak at 4.5%, before declining the following year. This reinforces the market’s expectation of third rate cut in 2025.

The immediate market reaction was mixed. Dollar assets initially saw a strong impulsive move, but profit-taking in gold followed before buyers stepped in to purchase the dip, reflecting a cautious but opportunistic market sentiment.

Bank of England: Steady Rates with Dovish Signals

The Bank of England kept rates steady at 4%, despite persistent inflationary pressures.

Governor Bailey, during the press conference, adopted a neutral-to-dovish tone, signaling that further rate reductions could occur, particularly given the country’s stagnant economic conditions.

On the employment front, UK labor data showed slight improvement, with the unemployment rate holding at 4.7% and claimant count change down to 17k, signaling modest stability but continued caution.

Bank of Japan Maintains Neutral Policy Amid Inflation Risks

The Bank of Japan (BoJ) maintained rates at 0.5%, keeping an overall neutral stance. However, two board members dissented, favoring a rate increase to 0.75%, highlighting that price risks remain skewed to the upside.

Governor Ueda emphasized maintaining current monetary policy to support the economy while closely monitoring ETF sales and noting that U.S. tariffs have not yet created significant negative impact.

Bank of Canada: Slight Rate Cut, Inflation Moderating

The Bank of Canada reduced rates by 0.25% to 2.5%, maintaining a neutral policy stance. Inflation pressures are moderating, and the BoC emphasized that quantitative easing is not under consideration. Economic forecasts remain positive, with GDP expected to grow by 1%, indicating that no recession is anticipated, while still leaving room for policy flexibility if needed.

Global Inflation and GDP Updates

• Japan CPI YoY decreased to 2.7% from 3.1%, driven by falling electricity and education costs.
• UK CPI rose 3.8%, slightly below the previous 3.9%, but still well above the BoE target, complicating potential monetary adjustments.
• Europe CPI came in at 2%, in line with ECB targets, allowing policymakers to remain patient.
• New Zealand’s GDP declined by 0.6%, but this represents a moderate improvement from the Q3 2024 low of -1.6%, raising expectations of potential rate cuts in upcoming central bank meetings.

Retail Sales Highlights

Retail data showed strong seasonal trends:

• U.S. retail sales rose 5%, boosted by a 10.1% increase in nonstore retailers and a 6.5% increase in food services and drinking places.
• UK retail sales increased slightly by 0.7%, below forecasts of 0.8%, reflecting continued economic weakness.

Market Implications and Takeaways

The week highlighted a neutral to dovish global central bank environment, with multiple policy signals pointing to slower rates or cuts ahead, despite pockets of resilience in retail and GDP data. Investors should remain alert to profit-taking opportunities in gold and other risk assets, while monitoring inflation trends and labor market developments.