Interest Rate Cuts: What Major Central Banks Are Doing and What to Expect Next
As an expert investment manager, financial market journalist, and SEO mastermind, I bring you the latest updates on interest rate cuts from major central banks around the world.
The European Central Bank recently delivered its second quarter-point cut of the year, joining other central banks in easing policy. With half of the 10 big developed market central banks already cutting rates, the U.S. Federal Reserve is likely to follow suit next week.
Here's a breakdown of where major rate setters stand and what traders are expecting in the near future:
1. Switzerland
The Swiss National Bank has been leading the way with rate cuts, recently lowering borrowing costs to 1.25%. Futures markets are predicting another cut on Sept. 26, with a possibility of a 50 basis point move. Outgoing SNB chair Thomas Jordan is concerned about the impact of a stronger franc on exports.
2. Canada
The Bank of Canada has implemented three consecutive rate cuts, with another 25 bps reduction expected in October. Canada's economy is facing challenges, with unemployment at 6.6% and inflation below target.
3. Sweden
Sweden's Riksbank is likely to lower borrowing costs by at least 25 bps later this month. Despite rates standing at 3.5%, inflation remains below target.
4. Euro Zone
The ECB recently cut rates, with expectations of further easing in the coming months. Money markets are pricing in additional cuts by year-end.
5. Britain
The Bank of England is expected to keep rates steady, with slow easing compared to other central banks. Markets predict only one more quarter point cut in the near future.
6. New Zealand
The Reserve Bank of New Zealand recently cut rates and is expected to do so again in October. Market confusion around data reporting has impacted decision-making.
7. United States
The Fed is anticipated to cut rates next week, with markets pricing in further easing by year-end. Economists forecast a total of 75 bps worth of cuts.
8. Norway
Norway's central bank is maintaining a hawkish stance, with expectations of a rate cut in December. Inflation remains above target, requiring a careful approach.
9. Australia
The Reserve Bank of Australia is holding rates steady, with concerns around inflation and economic struggles. Markets are not anticipating a rate cut until December.
10. Japan
The Bank of Japan has raised rates twice this year, causing market volatility. Despite inflation rising, the BoJ is expected to keep rates unchanged next week, with potential for another increase by year-end.
Analysis: With central banks around the world cutting rates, investors may see changes in borrowing costs, inflation, and economic growth. It's important to monitor these developments and their potential impact on investment portfolios, savings, and overall financial planning. Stay informed and consult with a financial advisor to make informed decisions based on the evolving economic landscape.