Central Banks Signal Caution Amid Global Risks

Central banks worldwide are showing cautious optimism regarding inflation and monetary policy, with the European Central Bank (ECB) maintaining a data-driven approach and signaling reduced room for further rate cuts amid persistent trade and growth risks. ECB officials continue to emphasize medium-term inflation control and a neutral stance, while remaining cautious about dramatic rate moves. In the United States, Federal Reserve officials highlight a balanced labor market and progress on inflation but are adopting a wait-and-see approach due to trade policy uncertainties and new tariffs. The Reserve Bank of India (RBI) reports that headline inflation has fallen below its 4% target, largely due to lower food prices, and is confident of sustaining a pro-growth policy for 2025–26. Despite these developments, all central banks stress ongoing risks from global market volatility, services inflation, and geopolitical tensions. Policymakers remain committed to flexibility and prudence as they navigate an uncertain global environment.