The Central bank or the central banking system of a nation, is at the core of a country's economy in the 21st century. 2024 was the year of some major ups and downs amid the ongoing turmoil in different parts of the world, with the crisis in the Middle East and Ukraine standing at the forefront.

In such a world, the role of the central banks around the world becomes crucial. We take a look at some of the key decisions that important central banks around the world made in 2024.

US Federal Reserve

Starting with the central banking system of the biggest economy in the world, the US Federal Reserve System had a year of great expectations. A year that started with the Fed trying to manoeuvre the country's inflation eventually led to what many on Wall Street were hoping for: a cut in its key interest rate.

The Fed's decisions in many ways create ripples across the board, as a change in any decision could have far-reaching consequences.

The key decision taken by the central bank came in when it further cut the interest rate of the country, after the most recent FOMC meeting in December. Here, the interest rate was slashed by 25 basis points, bringing the overall interest rate down to the range of 4.25-4.50 per cent, before 2025.

Reserve Bank Of India

Then we come home to the RBI or the Reserve Bank of India. The RBI has also had an intriguing year, navigating through the global and domestic difficulties that it had to face. One of the key decision from the central bank, apart from its role in regulating the interest rate was to fix aberrations in the economy.

The RBI worked towards this by alerting and issuing warnings to NBFCs of the perilous nature of their business. It also clamped down on organisations for violations.

This included actions on Paytm Payments Bank to a handful of microfinance companies. When it comes to interest rates, the RBI, unlike the Fed chose a different, and most notably, its own path.

The RBI interest rate or repo rate remained at where it started the year at 6.50 per cent, as it tried to manage and tackle inflation and other crises. In addition, the year also ended with a change of guard at Mint Street. This is because 2-term governor, Shaktikanta Das made way for RBI's 26th governor, Sanjay Malhotra.

European Central Bank

The ECB which is at the heart of monetary policies of the multi-nation block, the European Union made decisions akin to the US Fed. The central bank navigated the same problems as the rest of the world, only one of the problems was more imminent, the war in Ukraine.

In addition, the European economy has been moving at a much sluggish pace than desired by many in the old continent. This comes at a time, when Europe's growth engines, namely France and Germany, have found it difficult to sustain their prowess and past glory.

One of the key decisions from the ECB was its decision to cuts its interest rates 25 basis points. This brought the interest rates down to 3 per cent, as it tries to revive growth in the region.

Bank of Japan

The Japanese economy has become an embodiment of economic stagnation over the past 3 and a half decades, ever since its great crash in the 1990s. The Bank of Japan's landmark decision this year is different to other central banks in this list.

Relinquishing its abstruse monetary policy, the BoJ push the benchmark interest rate from the near negative territory, by increasing the key rates. The land of the rising sun and sluggish growth currently has an interest rate of 0.25 per cent.

Bank of England

The Bank of England in some ways was ahead of the curve. This because, the central bank of the United Kingdom had already started slashing interest rates, before the Americans. After cutting its key interest rates in November, it retained the rate in December, keeping it at 4.75 per cent.

Inflation is another major concern that, like other economies, has daunted the UK. In fact, the Bank of England was able to achieve its 2 per cent inflation rate in July 2024 after 3 long years.

 People's Bank of China

The Central Bank of China or People's Bank of China has a similar challenge in hand, with different modalities. Flailing growth and slow consumption, in addition to hostility from trade partners over dumping of its products, did not make life easier for central bank officials in Beijing.

The key decision from this corner came when, breaking with Xi Jinping philosophy of manufacturing the way out of slump, the central bank tried to boost its economy with a stimulus. The stimulus, however, according to some was half-hearted and did land the desired results, apart from making Chinese indices rally for a few weeks before the slump. The larger slowdown continues despite those efforts.

Argentina

On an additional note, the Central Bank of Argentina had a different story to tell. The bank, which according to new president Javier Milei was and is the country's public enemy number 1 appears to be being constricted, as Milei hardcore libertarian anti-state austerity policies appear to be paying off, at least for now, as the country is reportedly out of sky-high inflation, along with a decrease in its trade deficit rate.

2025 will be an interesting year, as the largest economy in the world, the United States will have a new leader, who promises chaos in addition to everything else. The role of central banks, in that case will become even more crucial.