Euro, US dollar, Canadian dollar, Russian ruble and Czech koruna are placed on the table as banknotes.
Picture Alliance | Picture Alliance | Getty Images
China and Japan remain exceptions to the global tightening cycle, but Chinese government interest rates have started to ease slightly, a global intelligence firm said. The EIU also expects the Bank of Japan to end its negative interest rate policy in the second quarter.
The central bank acknowledged that inflation was easing faster than expected, lowering its annual inflation forecast to 2.3% from an average of 2.7%. The ECB has set an inflation target of 2%.
Switzerland's inflation rate rose 1.2% year-on-year in February, the lowest level in about two and a half years, raising expectations that the Swiss National Bank may cut interest rates at its March 21 meeting. Ta.
The Swiss National Bank's current policy rate is 1.75%, and the central bank's inflation target range is 0-2%. According to LSEG, there is a more than 40% chance of a 25 basis point rate cut in March, which would lower the Swiss central bank's key policy rate to 1.5%.
UBS expects the Swiss central bank to wait until the second quarter for its first major rate cut, but has not ruled out cutting rates this month.
Turkey's central bank kept interest rates unchanged at 45% in February, ending a tightening cycle after eight consecutive hikes, and many expected rates to remain there for most of 2024. The country's inflation rate is currently around 65%.
JPMorgan said in a research note that Turkey's central bank kept its year-end rate forecast unchanged at 45% and may cut rates in November and December.
ANZ said in a recent report that Australia's economy suffered a “sustained slowdown” in the second half of 2023, with gross domestic product (GDP) growth at just 0.2% quarter-on-quarter in the fourth quarter. . This comes after gross domestic product (GDP) rose 0.3% in the third quarter compared to the previous three months.
Auckland Savings Bank does not expect the RBNZ to start cutting the cash rate until November.
Bank Indonesia kept the benchmark policy rate unchanged at 6% at its recent meeting.
The Southeast Asian nation's consumer price inflation rate is currently within Bank Indonesia's annual target range of 1.5% to 3.5%, but the central bank's governor is considering a 75 basis point cut in the second half of this year.
Bank Indonesia Governor Perry Warjiyo recently told CNBC's JP Ong that “we continue to monitor the global ramifications…mainly the impact of the direction of US monetary policy.”
BMI, the research arm of Fitch Solutions, said the bank is “working with central banks in the U.S. and other developed countries to raise its benchmark interest rate by 5% by the end of 2024, starting in the second half of this year, to avoid raising interest rates.” We expect it to drop to %.” Undue downward pressure on the Indonesian rupiah. ”
Unlike other economists, he expects the Bank of Japan to raise rates rather than cut them this year.
The Bank of Japan is expected to move toward ending its negative interest rate policy by April, subject to annual wage negotiations, according to economists at Oxford Economics and Macquarie.
Spring wage negotiations are an important factor in determining whether Japan's inflation rate can sustainably achieve the Bank of Japan's 2% target, which is a prerequisite for lifting the Bank's negative interest rate policy.
Kwon Kwon, senior economist for Asia at Goldman Sachs, said the Bank of Korea could still be the first in Asia to cut interest rates, citing ongoing disinflation and weak consumer spending.
Kwon said the strong recovery in semiconductor exports due to the advent of AI will allow the Bank of Korea to ease constraints from US monetary policy and inflation.
“The Bank of Canada is the first candidate to cut rates,” Carl Weinberg, chief economist at High Frequency Economics, told CNBC. He explained that Canada's CPI (excluding shelter prices) is up just 1.7%. This is below the central bank's inflation target, and Weinberg noted that all price increases the BOC can control within the economy are below its inflation targeting mandate.
“2024 will be the pivot year for rate cuts,” Weinberg added.
However, Morgan Stanley says Asian central banks are unlikely to cut interest rates ahead of the Fed, as a strong dollar means most Asian currencies remain relatively weak.
Economists at the investment bank said in a note that the possibility of further currency depreciation could further increase inflation risks for these countries.
“Although inflation is improving, most economies in the region have not only reached their target ranges, but the gap there is still narrowing,” Morgan Stanley said.
