The past year has been eventful, and with the formal year-end report, we summarise the results achieved for you. The 2025 financial year can broadly be divided into three phases. At the start of the year, there was a sense of optimism in anticipation of an economic policy conducive to growth and falling interest rates. This phase of rising prices was abruptly interrupted in early April by the announcement of tariffs by the US. Once it became clear that many of these tariffs would be eased as part of so-called 'deals' and the US opened the door for tech giants to advance artificial intelligence, the third phase began, in which financial markets were propelled to new heights by investments in these future technologies.
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Economic growth: Strong growth in the USA, weaker trends in Europe and China
Growth in the industrialised nations has recently looked rather bleak. In the highly export-oriented economies of Japan and Switzerland, GDP shrank in the third quarter, and the United Kingdom also posted weak figures. The eurozone recently recorded only minimal, but at least positive, growth. Germany remains the main cause for concern.
In the USA, the situation remains somewhat different for now. There, the third quarter once again saw robust growth of 4.3 per cent. However, this strong momentum has recently become noticeably weaker and currently seems to be supported mainly by consumption among households with high incomes. Additionally, at the start of the fourth quarter, the slowdown in the labour market has intensified further.
Economic conditions are weakest in China. Fixed asset investment has continued to shrink, consumer growth has slowed significantly, and the fall in house prices has worsened again. Thus, the global growth outlook remains subdued.
Inflation: Surprising easing of inflation rates
There has been some movement in the inflation figures for the industrialised countries. The biggest surprise came from the USA, where the core rate unexpectedly fell from 3 to 2.6 per cent in November. This is likely, among other things, due to the cooling economy. In the United Kingdom, the core rate also dropped unexpectedly from 3.4 to 3.2 per cent. Switzerland’s inflation rate has also declined, with a core rate of 0.4 per cent now gradually approaching the lower end of the National Bank’s target range.
Core inflation in Japan remains high at 3.0 per cent. There has also been little movement in the eurozone, where the core rate remained unchanged at 2.4 per cent in November.
Monetary policy: Further monetary easing
In December, the US Federal Reserve (Fed), European Central Bank (ECB), Swiss National Bank (SNB) and the Bank of Japan (BoJ) all made decisions regarding their key interest rates.
Despite inflation remaining above its target, the Fed cut its key interest rate by 25 basis points to a target range of 3.5–3.75 per cent. Fed Chair Jerome Powell justified this controversial and narrow decision by pointing to a further weakening of the US labour market. Meanwhile, the SNB left its key interest rate unchanged at 0 per cent, despite an economic downturn in the third quarter and falling inflation. SNB President Martin Schlegel noted that the threshold for negative interest rates remains very high. The ECB also kept its key rate. However, with a rate of 0.75 per cent and inflation at 2.9 per cent, Japanese monetary policy remains highly expansionary.
