Amid major changes in global monetary policy, central banks in developed countries are increasingly moving towards easing measures. Seven of the 10 major central banks monitored have already begun easing policy. This reversal comes as inflation rates rise and concerns about economic growth grow.
The Swiss National Bank (SNB) is one of the financial institutions that has changed its stance in response to falling inflation (currently 0.8% year-on-year). This will allow the SNB to cut interest rates to 1% in September, with the possibility of further easing to support Swiss exporters struggling with the strong franc. Money markets expect Swiss interest rates to fall further to 0.5% by March 2025.
In Canada, the Bank of Canada is expected to cut interest rates for the fourth time in a row on October 23, to 3.75%, with a similar possibility of a 50 basis point cut. This expectation comes in response to concerns about Canada’s inflation rate falling to 2%, a weak economy, how high interest rates are impacting demand and increasing consumer credit stress.
The Sveriges Riksbank has signaled further successive cuts in the coming months, with the current rate at 3.25%, after starting to cut rates in May in response to an economic slowdown exacerbated by previous rate hikes. .
The Reserve Bank of New Zealand (RBNZ) is also taking an aggressive approach to monetary easing, cutting interest rates by 50 basis points in October. Inflation in the second quarter was 2.2%, within the RBNZ’s target range, and traders are considering the possibility of similar rate cuts in November and possibly February.
The European Central Bank (ECB) cut interest rates for the third time this year on Thursday, with markets expecting further cuts of 25 basis points at each of its next three meetings. The ECB aims to move the benchmark interest rate to a more neutral environment by the second half of 2025.
In the United States, the Federal Reserve began cutting interest rates by 50 basis points last month, the first rate cut in more than four years. The market now expects approximately 50 basis points of additional easing by year-end, lower than previously expected, following comments from Fed officials suggesting a recession is unlikely and labor market conditions are stable. is incorporated.
The Bank of England (BoE) also cut its policy rate from 5.25% to 5% in August, but markets are now speculating that two further cuts will be made this year after inflation data were significantly lower than the BoE expected. I’m betting on the possibility that it will happen.
In contrast, Norway’s central bank has maintained a more restrictive stance, keeping interest rates at 4.50% and delaying rate cuts until at least the first quarter of 2025. Despite the unexpected decline in core inflation, the market is only expecting a 1in in September.・There is a possibility of three rate cuts by the end of the year.
The Reserve Bank of Australia has held interest rates at 4.35% since November last year, and the chance of a rate cut by the end of the year remains low at 30% given Thursday’s strong labor market data.
Finally, the Bank of Japan, facing rising inflation, raised borrowing costs to 0.25% in July. However, most economists expect interest rates to remain stable for the rest of the year, especially given that new Prime Minister Shigeru Ishiba’s economy is not ready for further increases and that the general election scheduled for October 27 means that the central bank will It is of the view that this is another reason to maintain current interest rates. At a meeting at the end of October.
Reuters contributed to this article.
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