The end of the global cycle of rate hikes?
The expectation that the Fed will stop after making a final interest rate hike in May also affects forecasts for other central bank decisions.
According to Bloomberg Economics, most of the global central banks are either nearing the end of interest rate hikes or have already ended their rate hike cycle and are preparing for rate cuts in the coming period.
While it is priced that interest rate cuts from Brazil to Indonesia could start this year, many developed countries are expected to follow a similar path. Interest rates are expected to be cut in 2024 in at least 20 of the 23 regions tracked by Bloomberg.
“Global interest rates will fall to 4.9 percent”
According to the Bloomberg Economics calculation, the global interest rate peak will be 6 percent in the third quarter, and this rate will decrease to 4.9 percent by the end of next year.
“Since the beginning of the year, central banks have been battered by opposing forces,” said Tom Orlik, Chief Economist at Bloomberg Economics. Headlines such as faster China reopening, Europe’s escape from crisis and the tight US labor market all advocate higher interest rates. The collapse of Silicon Valley Bank and Credit Suisse has the opposite effect. So far, arguments for tightening have won the day, with limited signs of a wider banking crisis. Peak rates are on the horizon, but we are not quite there yet.”