Over the past few years we have seen largely synchronised monetary policy cycles within major developed market economies, with the exception of Japan.
The Covid shock sent interest rates to zero or below in 2020, quickly followed by steep hiking cycles in 2022 and 2023, which brought them into restrictive territory, where they were held for 12 months. Now that inflation is approaching target levels, monetary policy is turning towards easing. Divergences in the pace of rate cuts are starting to emerge across regions whose central banks have to weigh the progress on inflation against the outlook on growth while managing the risk of labour market weakness. Bank of England holds interest rates at 5% after inflation stalls Most rec...
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