Global news wrap: Monetary policy updates, Venezuelan oil, US growth surprise

Monetary policy moves

In 2025, major central banks began easing interest rates as inflation pressures moderated, but the pace and extent of cuts varied widely across countries. This divergence is expected to become even more pronounced in 2026 as policymakers grapple with slowing disinflation, resilient growth in some economies and rising geopolitical and political risks.

After delivering three rate cuts from September last year, the US Federal Reserve expected to move cautiously, with limited additional rate cuts as the economy grapples with sticky inflation. Political uncertainties and leadership transitions are likely to keep the Fed under close watch.

In the UK, the Bank of England has already slowed the pace of rate cuts after a series of narrow votes, signalling greater caution in this year amid weak growth. The European Central Bank, however, appears to be near the end of the rate easing cycle given a stable inflation, and is expected to hold rates further.

The Reserve Bank of India (RBI) is also expected to move ahead cautiously, maintaining its accommodative stance, as a low inflation print allows room for another rate cut.

Japan remains an outlier as it is expected to continue to tighten policy gradually during the year.

Fuel's gold

Venezuela, home to the world’s largest proven oil reserves at roughly 303 billion barrels, produces just one million barrels per day—a fraction of its potential—after decades of mismanagement, crumbling infrastructure, and international sanctions.

Earlier this week, the story took a dramatic turn when US forces captured President Nicolás Maduro and the Trump administration announced it would oversee the country’s oil sector, bringing in major American companies to revive production. Trump also said US firms would spend billions to fix Venezuela’s broken oil infrastructure and restart crude exports, signaling a direct intervention in the country’s energy market.

Most of the Venezuelan reserves are heavy, sour crude from the Orinoco Belt—technically recoverable but costly and complex to refine. Analysts warn that even with US investment, meaningful output growth will take years and require legal reform, security guarantees and political stability. If successful, Venezuela could become a major supplier of heavy crude, easing global refinery bottlenecks, reshaping flows to the US Gulf Coast, and reclaiming its pivotal role in global energy markets.

US growth surprise

US President Donald Trump’s tariff policies were expected to put the country’s economy in a tough spot. However, the opposite has happened. The US recorded strong growth in the second half of 2025, with economic activity rising an impressive 4.3% in the July-September quarter.

The data release was delayed due to the US shutdown. Trump dubbed it as an ‘economic golden age’ as soon the latest data was out last month. Experts, however, are still apprehensive about the growth momentum.

GDP growth picked up strongly in Q3 due to higher consumer spending, improved trade dynamics, robust investments in artificial intelligence (AI). However, according to EY, growth is expected to fade to 2.0% in 2025 and 1.9% in 2026. According to the organization, the three pillars of robust growth—spending by affluent consumers, AI-driven investments, and asset-price strength—are vulnerable and can lead to slowdown in coming quarters.

Economists have also raised concerns about sluggish the job market, which seems to suggest the US economy may not be doing so well. The US jobless rate increased to 4.6% in November, the highest since September 2021.

China's export controls

China is currently the world's biggest exporter, with a trade surplus above $1 trillion. The country uses this dominance to flex its global power, imposing export controls to gain favourable outcomes. In the past two years, China has imposed export controls on critical minerals such as gallium, germanium, graphite, rare earths, and even silver. Beijing claims these curbs are meant to protect its technological edge, but independent experts often see them as an attempt to gain geopolitical leverage over Western powers, especially the US.

Instead of a blanket ban, China has used case-by-case licensing to retain the flexibility of tightening or relaxing the norms to reward allies and penalize adversaries.

As China continues to announce these curbs, India has been deeply affected because of its high reliance on cheap imports from the world’s second largest country. The curbs on critical minerals caused supply-chains issues for fighter jets, missile guidance systems and auto segments in the US, EU and India. The latest curbs on silver could have ripple effects on the manufacturing of solar panels and high-end electronic goods.

Winter break

Unseasonally high winter temperatures across multiple regions this Christmas has underscored a troubling shift in global climate patterns. From the Arctic region, the US and parts of Europe—areas that typically experience freezing winter temperatures—are now experiencing warmer conditions.

Iceland saw December temperature surge to nearly 20 degree celsius, breaking long-standing records, while the US logged its warmest Christmas period on record, with average highs well above historical norms. According to data by the National Oceanic and Atmospheric Administration (NOAA), Arctic surface air temperatures rose to a new high between October 2024 and September 2025, continuing the trend of warmer temperature each passing year compared to global average over the past decade.

Scientists say such winter warmth—once considered statistical anomalies—are becoming more frequent as climate change amplifies heat-trapping atmospheric systems. The spread of these extremes during the coldest part of the year highlights how climate change is increasingly reshaping weather behaviour simultaneously across regions.