The global rate cut cycle is picking up steam, with half of developed markets' central banks having begun easing, and the U.S. Federal Reserve setting up a move in September.
Investors are also watching the Bank of Japan - which is going the other way after it raised interest rates on Wednesday to their highest in 15 years.
Here's where leading central banks stand and what they are expected to do next:
1/ SWITZERLAND The Swiss National Bank in March implemented the first rate cut among developed market economies of this cycle and lowered borrowing costs again to 1.25% in June. It is expected to cut again in September.
Swiss inflation has moderated to 1.3% year-on-year, firmly within the SNB's target range.
2/ CANADA Traders widely expect more rate cuts from the Bank of Canada, which is shifting gear from suppressing inflation, to safeguarding the economy and has lowered borrowing costs by half a percentage point to 4.5% since June.
Population growth has helped Canada avoid a recession, but driven unemployment higher, while previous rate hikes have dampened
consumer spending
and
housing demand
. 3/ SWEDENSweden's Riksbank ended a long era of monetary tightening in May, with its first rate cut of this cycle and stands ready to cut two or three times more after inflation cooled off and the economy contracted sharply.
Swedish interest rates stand at 3.75%, looking steep compared to the 1.3% consumer prices rose by in June from a year earlier, on the EU harmonised measure.
4/ EURO ZONE The European Central Bank kept rates unchanged at 3.75% last month, following a cut in June, and resisted discussing its next move.
Overall, euro zone inflation has dropped close to the ECB's target. But service sector price pressures have kept some of its policymakers cautious.
Money markets price a roughly 70% chance of another rate cut in September.
5/ BRITAIN The Bank of England cut interest rates from a 16-year high on Thursday after a narrow vote in favour from policymakers divided over whether inflation pressures had eased sufficiently.
The cut was the first since March 2020. Governor Andrew Bailey - who led the 5-4 decision to lower rates by a quarter-point to 5% - said the BoE's Monetary Policy Committee would move cautiously going forward.
6/ UNITED STATES Federal Reserve chair Jerome Powell on Wednesday put the U.S. central bank on course for its first cut of this cycle in September, following a reassuring step down in U.S. inflation.
The Fed is looking towards its first 25 bps cut after holding rates in the 5.25% to 5.5% range for a year as it shifts its focus to the risks of the economy weakening and unemployment rising.
Money markets are pricing 46 bps of cuts by November and almost 71 bps by December.
7/ NEW ZEALAND The Reserve Bank of New Zealand held its cash rate steady at 5.5% at its July meeting, but opened the door to possible easing if inflation slows.
Traders see the RBNZ most likely staying on hold at its August 14 meeting then cutting rates in October.
8/ NORWAY Norway's annual core inflation, which strips out energy prices and taxes, fell faster than expected to 3.6% in June.
That remains uncomfortably high for the Norges Bank, which anticipates holding rates at their 16-year high of 4.50% until early 2025, although futures markets price a roughly 50% chance of a move in December.
9/ AUSTRALIA Lower-than-expected core inflation data released Wednesday has changed the picture for the Reserve Bank of Australia.
Markets had seen an outside chance of a rate hike at the RBA's Aug. 5-6 policy meeting, but that's now off the table. Traders see a 70% chance they will cut rates from their current 12-year high by year-end instead.
10/ JAPAN The Bank of Japan is the outlier. The standout dove until last year, the BOJ, on Wednesday raised its key policy rate to 0.25% from 0-0.1%, levels unseen in 15 years, and unveiled a detailed plan to slow its massive bond buying programme.
BOJ Governor Kazuo Ueda did not rule out another hike this year and stressed the bank's readiness to keep raising borrowing costs to levels deemed neutral to the economy.
That helped push the dollar below 150 yen for the first time since March. JPY=EBS
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Canada's inflation and interest rates https://reut.rs/4drDc5iSweden's inflation and interest rates https://reut.rs/3A2nZJw Euro zone inflation and ECB interest rates https://reut.rs/4du7tkd US inflation and interest rates https://reut.rs/4drbVA8 New Zealand's inflation and interest rates https://reut.rs/3xYTuUl Norway's inflation and interest rates https://reut.rs/3SrpmYv Australia's inflation and interest rates https://reut.rs/4do7Igz Japan's inflation and interest rates https://reut.rs/3YnDA0w Britain's inflation and interest rates https://reut.rs/3LPIBrc Switzerland's inflation and interest rates https://reut.rs/46t1Osi Britain joins the rate cut club https://reut.rs/3StBOak
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