The high tide for global interest rates has passed, but respite for the world economy may be limited as policymakers stay wary at the threat of inflation.
Rate Chokehold on World Economy Is Set to Loosen Only SlowlyNepalese Billionaire Who Made His Fortune Making Instant Noodles Aims to List India Unit by 2026Chip Plant Wizard Faces Hokkaido’s Bitter Weather in Latest TestGold Jumps After Iran Strike Against Israel Stokes Haven DemandSingapore Car Startup Seeks Value Over $1.
Such a policy path reflects how central bankers are treading a fine line between aiding anemic economies and guarding against a resurgence in consumer-price growth, potentially aggravated by another energy shock. A cloudier outlook for the Fed and the shadow of US presidential elections won’t help either.
Fed officials will be watching for signs in the second quarter that inflation is still headed firmly toward their 2% target rate. The ECB is on track to cut rates at its next meeting in June after President Christine Lagarde laid firmer groundwork for such a move at last week’s press conference. Lagarde insisted last week that her central bank is “not Fed dependent.” But she did acknowledge that the US is a “very sizable economy” and that any implications from there will feed its way into staff forecasts produced for the June 6 decision.“The ECB is preparing to lower rates. Headline inflation and measures of underlying price increases are rapidly decelerating, and wage growth is slowing.
Governor Andrew Bailey has been guarded on the exact timing of a reduction but recently said the UK is “on the way” to cutting rates after a shift in tone from the central bank’s rate-setters. While the next meeting in May, which includes a new round of forecasts, is seen as too soon for a pivot, the Monetary Policy Committee could use the decision signal an imminent shift is ahead.
The PBOC is seen as likely to step up lending to policy banks to support housing and infrastructure projects. While excitement about new QE-like monetary tools is growing, such innovations appear to be a way off yet.“We expect the PBOC to lower its one-year policy rate by 10 basis points to 2.40% in 2Q and deliver two more cuts of similar magnitude by the end of the year. Policymakers need to fight deflation in producer prices and downward pressure on consumer prices.
Doubts about the central bank’s tolerance for inflation once Lula appoints a new governor later this year have also kept investors’ consumer price estimates above the 3% target for months.“We expect the BCB to halve its rate-cut pace to 25 basis points per meeting in June, and extend it through year end. Concerns about global inflation, slower monetary easing in advanced economies and a tight labor market at home warrant a more cautious pace.
The central bank prefers to peg inflation expectations at the midpoint of its 3% to 6% target range. Kganyago has repeatedly said it will only lower rates once inflation retreats to the 4.5% midpoint and is sustained there.“Resilient price pressures will keep the SARB from cutting rates this year. Reducing inflation to the mid-point of the central bank’s 3%-6% target is taking longer than anticipated. We foresee dry conditions having only modest effects on the cost of food.
Key to what it does next will be the impact on inflation of a recent threefold increase in electricity tariffs that will affect millions of residents and businesses in the urban areas and talks of a new minimum wage in May. The inflation rate has been at more than triple the top end of the central bank’s 6% to 9% target range since October.“Nigeria is nearing the end of its hiking cycle, helped by an appreciating naira.
Unexpectedly slow inflation data since then has so far vindicated that decision by policymakers including departing President Thomas Jordan.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Fed, BOJ Dominate Rate Week for Almost Half the Global EconomyInvestors may glean more on the Federal Reserve’s resolve to ease and how close Japan is to finally exiting negative interest rates as central banks set policy for almost half the global economy.
Read more »
Fed, BOJ Dominate Rate Week for Almost Half the Global Economy(Bloomberg) -- Investors may glean more on the Federal Reserve’s resolve to ease and how close Japan is to finally exiting negative interest rates as central...
Read more »
Australia Set to Extend Rate Pause as Economy Enters Slow Lane(Bloomberg) -- Australia’s central bank is widely expected to hold interest rates at a 12-year high on Tuesday as the economy shows signs of slowing further while unemployment trends higher.
Read more »
Brazil Economy Starts 2024 With Modest Growth, Backing Interest Rate CutsBrazil’s economy slowed at the start of the year, with activity continuing to wane ahead of another likely central bank interest rate cut this week.
Read more »
Bank of England sees economy 'moving in right direction' for rate cutsLONDON (Reuters) -Britain's economy is 'moving in the right direction' for the Bank of England to start cutting interest rates, Governor Andrew Bailey said...
Read more »
Bank of England sees economy ‘moving in right direction’ for interest rate cutsThe BoE’s interest rate-setters voted 8-1 to keep borrowing costs at their 16-year high of 5.25% on Thursday as the two officials who had previously called for higher rates changed their stance
Read more »