Major central banks resumed their quest to ramp up interest rates in February after a tepid start to the year with price pressures proving more sticky than markets and many policy makers had hoped for. | Reuters
Recent inflation and labor data from some of the world’s top economies had surprised markets and prompted analysts to lift expectations on where Fed and ECB rates will peak. Markets now price ECB rates peaking at just above 4% at the turn of the year, while Fed rates are seen as high as 5.5 percent-5.75 percent.
In emerging markets, the rate hike push showed some evidence of slowing down. Thirteen out of 18 central banks in the Reuters sample of developing economies met to decide on rate moves, but only four hiked by a total of 175 bps — Mexico, Israel, the Philippines and India. Turkey delivered a 50 bps cut in the wake of the deadly earthquake.
The February move follows January that saw six out of 18 central banks delivering a total of 225 bps of hikes in January while another six met but decided to keep rates unchanged. “This shock came for everyone together, but it might disappear at different rates,” said Gabriel Sterne at Oxford Economics.
“The disinflation trend is looking surprising good in Asia now for example where services inflation has already turned a corner.”Subscribe to our daily newsletter
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