As markets enter 2026, attention turns to what central banks will do next. Monetary policy remained one of the main drivers of financial markets through 2025; after aggressive rate hikes to counter an inflation shock, both the Federal Reserve and the European Central Bank have since moved in the opposite direction, loosening monetary conditions. The question now is how their next steps will shape markets and economic momentum in the year ahead.

Key facts: central banks were the principal market movers in 2025. Following a period of significant tightening, the Fed and the ECB reversed course and continued to ease policy, contributing to looser financing conditions across advanced economies. Investors will closely monitor inflation prints, growth indicators and policy statements for signs of further adjustments.

Context: the shift from rapid rate increases to easing reflects central banks’ responses to shifting inflation and growth dynamics. Market participants will be watching upcoming central bank meetings and economic data for clearer guidance on the trajectory of rates and liquidity in 2026. #MonetaryPolicy #Fed #ECB #FiatNews