Central Banks curb enthusiasm for policy rate hikes
Central banks around the world are expected to take a break from aggressive interest rate hikes as global enthusiasm wanes.
In the aftermath of the Federal Reserve’s quarter-point hike and a market rally driven by investor optimism, peers are following suit.
This week, the Reserve Bank of Australia and the Reserve Bank of India are expected to deliver quarter-point increases in borrowing costs, which may mark their final hikes for now.
Meanwhile, Poland’s central bank has already halted rate increases and is expected to ratify that decision on Thursday, and Romania may also follow suit.
In Latin America, where monetary officials have been early adopters of hawkish measures to combat surging prices, rate-hiking cycles are losing momentum.
Mexico’s central bank may only deliver a quarter-point increase, its smallest move since 2021.
The European Central Bank and Icelandic policy makers may still increase interest rates by 50 basis points this week, but investors are keeping a close eye on Russia’s central bank meeting on Friday, which may shift focus to monetary easing.
In Europe, attention will be on the European Commission’s quarterly forecasts, German inflation data, and the UK’s GDP for December.
Meanwhile, in Asia, the focus will be on China’s factory-gate prices and CPI data, which could raise concerns about another inflation surge worldwide.
Overall, the global hiking fever appears to be cooling down and investors are wondering when the rest of the central banks will follow suit.
