Your Money | Rate hikes over with inflation easing

financialexpress.com:

In 2022, after the war between Russia and Ukraine broke out, there were supply chain disruptions. The combination led to inordinately high inflation. Central banks all over the world used the medicine they know: hike interest rates and take back part of the excess liquidity. At the juncture where we stand now, it seems rate hikes are over.

USA: The Federal Reserve has paused twice, after the last rate hike in July 2023. Subsequent to the latest review meeting on November 1, 2023, the Fed chairman gave statements on both sides (hike/cut), implying the Fed would act as need be. However, it has been perceived by the market that rate hikes in the US are over. Now it is about waiting for rate cuts, likely sometime next year. The timing of the rate cut(s) expected next year is a matter of opinion, but broadly, it is expected in the second half i.e. after July 2024. The potential weakness of their economy going forward and forthcoming elections are reasons for them to cut rates.

Euro zone: The European Central Bank, after its last rate hike in September 2023, paused in their review meeting in October 2023. Here as well, like in the US, it is about waiting for interest rate cuts, likely sometime next year.

UK: The Bank of England, after its last hike in August 2023, has paused in the latest two review meetings. A common aspect of the US, Euro zone and the UK is that they have a huge stockpile of debt. Servicing is a burden, and higher the interest rate, higher is the burden. Their central bankers may put up a brave face and state that they would do whatever it takes to contain inflation; i.e., hike interest rates. Economists would recommend that inflation is still higher than their target of 2% and further rate hikes are