Central banks' rate hike push slips into August lull, EM diverging
By Karin Strohecker and Vincent Flasseur
LONDON (Reuters) — Central banks across major developed and emerging economies took a breather in August with the pace and scale of interest rate hikes shifting another gear lower as diverging growth outlooks and inflation risks muddied the outlook ahead.
August — often a more quiet month for monetary policy decisions — saw only four of the central banks overseeing the 10 most heavily traded currencies hold rate setting meetings. Two of them — Norway and United Kingdom — delivered a total of 50 basis points of rate hikes in the lowest such tally since January. Australia and New Zealand kept their benchmarks unchanged, Reuters data showed.
The moves compare to three hikes across six meetings in July, and takes the total 2023 year-to-date tally for G10 central banks to a total of 1,075 bps across 33 hikes.
But the outlook ahead was murky, with surprisingly resilient U.S. data contrasting with disappointing numbers from China and much of Europe and markets searching for clues when major central banks could embark on easing rates.
«This downbeat growth story does have an upbeat consequence; inflationary pressure should ease further,» said ING's global head of macroeconomics Carsten Brzeski. He added that while this was likely not enough to bring inflation back to target for many central banks, it should be low enough to see the peak in policy rate hikes.
«Central bankers would be crazy to call an end to those hikes officially; they don't want to add to speculation about when the first cuts might come,» Brzeski said.
Across developing economies, more evidence emerged that the turn of the rate cycle was well established in some regions. Brazil's central bank kicked off its
Read more on investing.com
