The new higher-for-longer stage of global monetary policy may last only until the early months of 2024 as central banks begin moving toward cutting borrowing costs.
That’s the outlook foreseen by Bloomberg Economics, whose aggregate gauge of world interest rates is seen beginning a swift descent in the first quarter. In advanced economies, that shift will take only slightly longer to transpire before they too synchronize downwards.
By the end of next year, only two of the 23 central banks in our quarterly global guide aren’t anticipated to have moved to rate reductions: borrowing costs in inflation-prone Turkey are seen staying steady, while the Bank of Japan is expected to finally exit negative monetary policy.
A remarkably stable “higher-for-longer” plateau in advanced economies that Federal Reserve chief Jerome Powell signaled in August will last no more than three quarters, according to the forecasts.
Both the US and the euro zone are expected to cut rates before the middle of the year, with the UK and Sweden waiting a bit longer.
The BE outlook points to a turning tide in the tightening cycle. It also highlights how the ultra-low-rate world that preceded it won’t be back any time soon, as the volatile era European Central Bank President Christine Lagarde terms as an “age of shifts and breaks” keeps officials wary of loosening too far.
