Scissors Cut The Rising Percentage Sign, Revenue Reduction, Cost Reduction, And Tightening Monetary Policy

2024 Is The Year Of The Rate Cut Pivot – Here’s When The World’s Central Banks Will Budge

The comments below are an edited and abridged synopsis of an article by Lee Ying Shan

As inflation loosens its grip, investors are monitoring interest rate decisions, with markets expecting a slew of rate cuts this year.

2024 Is The Year Of The Rate Cut Pivot – Here’s When The World’s Central Banks Will Budge - BullioBuzz - BMG
Scissors cut the rising percentage sign, revenue reduction, cost reduction, and tightening monetary policy

While rates may remain elevated in 2024, economists expect a mild rollback late this year, according to a report by the Economist Intelligence Unit (EIU). Most central banks hiked policy rates from early 2022 in a bid to stifle inflation.

China and Japan remain exceptions in the global tightening cycle, though Beijing’s rates have started to ease slightly. EIU expects the Bank of Japan will exit its negative interest rate policy in the second quarter.

Shan discusses the US; the Eurozone; Switzerland; Bank of Canada; Turkey; Australia; New Zealand; Indonesia; the Bank of Japan; and South Korea.

“The Bank of Canada is my candidate to be the first to cut,” Carl Weinberg, chief economist at High Frequency Economics said. Canada’s CPI, excluding shelter prices, is rising by just 1.7%. That’s below the central bank’s inflation target and Weinberg noted that all the prices the BOC can control in the economy are rising less than the inflation target mandates.

But Asian central banks are unlikely to cut ahead of the Fed as a strong US dollar means that most Asian currencies remain relatively weaker, said a spokesperson for Morgan Stanley.

The potential for further depreciation could still lend some higher inflation risks to these countries, the investment bank’s economists said in a report.

“While inflation is coming off, in most of the region’s economies it has either just reached the target range or is still closing the gap to target range.”