The pace of rate cuts by major central banks slowed in April as policymakers faced uncertainty about the outlook for growth and inflation amid escalating trade tensions.
Of the five major central banks that met in April, the European Central Bank and the Reserve Bank of New Zealand cut rates by a cumulative 50 basis points.
Rate setters in Australia, Japan and Canada kept their benchmarks unchanged, while central banks in Sweden, Switzerland, Norway, Britain and the United States did not meet in April. Half of the central banks in the Group of Ten (G10) countries cut rates in February.
The main focus now turns to the Federal Reserve, which will conclude its rate-setting meeting later on Wednesday.
“The Fed faces an increasing policy trade-off between weakening economic activity and persistently higher inflation at this week’s meeting, as shown by the first quarter GDP data,” said Jean Boivin, president of BlackRock Investment Institute.
Reuters calculations show that this year, G10 central banks have raised rates by a total of 25 basis points, including one hike in Japan, and cut rates by 325 basis points, or 12 times in total.
Emerging markets are showing a similar picture, with a Reuters sample of 18 developing economy central banks showing a slowdown in easing.
Of the 13 central banks that met, four cut rates. India, Thailand, the Philippines and Colombia all cut their benchmarks by 25 basis points, while eight kept rates unchanged.
“Dollar volatility, uncertainty about the Fed and concerns that tariff diplomacy will fuel capital outflows have made some emerging market central banks appear cautious in recent policymaking,” said Jon Harrison of TS Lombard, noting that South Korea and Indonesia kept rates unchanged despite low inflation and a deteriorating growth outlook.
Meanwhile, Turkey unexpectedly raised rates by 350 basis points to stem capital outflows caused by domestic political turmoil.
Turkey’s latest move, along with Brazil’s two rate hikes since the start of the year, brings the total tightening so far in 2025 to +550 basis points.
On the easing side, other emerging market central banks have cut rates 14 times, totaling -850 basis points.
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