Global rate hike push slows to a trickle in April ahead of busy May
LONDON – Interests from central banks around the globe slowed to ainthanks to a combination of easing inflation and slowing growth prospects amid a dearth of meetings on monetary policy decisions.
saw two interests across five meetings by central banks overseeing the 10 most heavily traded currencies. Policy makers in New Zealand and Sweden delivered a total of 100 basis points (bps) ins, while Japan, Australia and Canada held fire at theirs. That compares to six interests across eight meetings by G10 central banks in March.
“We are approaching the end of thehiking cycle, we are at an inflection point,” said Omar Slim, co-head of Asia ex-Japan fixed income at PineBridge Investments.
However, whilst the developed market tightening cycle was in its final throes, policy makers had still some lose ends to tie up inwith Australia’s central bank surprising markets with an intereston Tuesday and policy makers at the U.S. Federal Reserve and European Central Bank – neither of which met last month – expected to deliver mores in coming days.
“The Fed is widely anticipated tobut likely to maintain a tightening bias to provide optionality for anotherif inflation doesn’t comply,” said Mark McCormick at TD Securities.
In emerging markets, further signs of a slowdown in thebecame evident. Eleven out of 18 central banks in the Reuters sample of developing economies met to decide onmoves, but only policy makers in Israel and Colombiad by a cumulative 50 bps. China, Indonesia, India, Korea, Russia, Turkey, Hungary, Poland and Chile all decided to stay put.
That compares to 14 central banks in developing economies meeting in March with five hiking by a total of 150 bps.
In a sign that a pivot tocuts was on the cards for emerging markets, Uruguay’s central bank – which is not part of the Reuters sample – cut its benchmark interestby 25 basis points last Wednesday, becoming the first to reduce interests in the region.
Analysts said policy makers in developing economies elsewhere were not far behind.
Central banks across Central and Eastern Europe provided firmer signs in recent days that with inflation now declining monetary looseningsoon be on the cards, said Nicholas Farr, Emerging Europe Economist at Capital Economics.
“But there are still clearly big concerns that inflation will be slow to fall back to central banks’ targets, and we think that interests will be cut by less than most analysts expect over the next couple of years,” Farr added.