Updated December 24th, 2023 at 17:45 IST
Want to borrow money from banks, here are key interest rates across the world
Following a prolonged campaign to combat soaring inflation, major central banks have temporarily halted the trajectory of high interest rates.
The global trends in central bank interest rates indicate a significant shift. Following a prolonged campaign to combat soaring inflation, major central banks have temporarily halted the trajectory of high interest rates, prompting traders to anticipate imminent rate reductions.
Federal Reserve chair Jerome Powell recently stated, "We've done enough," signalling a pause in monetary tightening. Similarly, the European Central Bank and the Bank of England kept rates steady, with the latter resisting expectations for rate cuts. Surprisingly, Norway bucked the trend with a rate hike.
Cumulatively, major central banks have increased borrowing costs by 4,015 basis points during this cycle, except for Japan, which has held a dovish stance.
Here's a breakdown of their current positions in terms of rate hikes during this cycle:
1) United States: The Fed's decision to maintain its key rate between 5.25 per cent and 5.5 per cent in December triggered market optimism. Powell's comments about inflation receding faster than anticipated and the possibility of rate cuts in view suggested a potential end to the Fed's aggressive tightening. Market forecasts are already predicting a substantial decrease of around 150 bps by next December.
2)India: The interest rate or the repo rate has been constant for past one year at 6.25 per cent of repo-rate.
3) Japan: The Bank of Japan, in a two-day meeting, is expected to acknowledge inflationary pressures without hinting at an immediate end to negative interest rates. Most economists anticipate a departure from this policy in the coming year, possibly in April. In October, the BOJ relaxed its 1 per cent cap on Japan's 10-year bond yield, allowing gradual increases in long-term borrowing costs.
4) Britain: Despite market speculation, the Bank of England maintained its key rate at 5.25 per cent and emphasised the need for sustained high rates. This stance tempered rate expectations slightly, although markets still anticipate over 100 bps of easing next year.
5) Euro Zone: The ECB is anticipated to initiate rate cuts next year amidst a deteriorating economic outlook. It maintained its deposit rate at 4 per cent and indicated an early conclusion to its bond purchase scheme, signalling the end of a decade-long experiment of accumulating debt across the euro zone.
(With Reuters inputs)
Published December 24th, 2023 at 17:20 IST
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