ECB, Canada join G10 central bank easing push in June
LONDON: The European Central Bank and the Bank of Canada in June joined the ranks of big central banks easing policy, while emerging markets ploughed ahead in their quest to lower interest rates. Three of the nine central banks overseeing the 10 most heavily traded currencies that held meetings in June reduced their lending benchmarks, with Switzerland delivering its second rate cut in this cycle.
This makes June the month with the highest number of rate cuts delivered by G10 central banks since March 2020, when policymakers slashed rates to shore up faltering economies in the face of the COVID-19 outbreak.
Meanwhile, the US Federal Reserve, the Bank of England, and central banks in Australia, Sweden, Norway and Japan - which is inclined to tighten not ease policy - kept lending rates unchanged in June. “We’re in this global disinflation path - it’s just probably a bit slower than what we’d hoped for six months ago,” said Paul Greer, portfolio manager at Fidelity International.
“We started to see G10 central banks cut rates - Sweden and Switzerland, Canada, the ECB. I have confidence that the Federal Reserve will cut rates this year as well, maybe even a couple of times.” The Fed is now expected to deliver a first full quarter-point rate cut in November.
Emerging market central banks soldiered on in their rate cutting endeavor, albeit at a slower path. Fourteen of the Reuters sample of 18 central banks in developing economies held rate-setting meetings in June, with four delivering cuts. Central banks in Brazil, the Czech Republic, Colombia and Chile reduced lending rates by 150 basis points between them. None hiked rates. — Reuters