(Finance) – “In addition to a busy global election calendar, 2024 was the year of rate cuts“. This was stated by analysts at Bank of America (BofA), at the end of a very rich week in this sense (reductions to the cost of money by the ECB, BNS and BoC).
It is observed that i 50 basis point cuts have become “quite frequent”as with the SNB and BoC this week and the initial Fed cut in September. The expectation next week is for the Fed to make another 25 basis point cut and further room to cut next year is seen.
“Going forward, we think the Global monetary policy will become increasingly less synchronizedas the case for a higher neutral rate is strongest in the US and Trump 2.0 carries downside risks for the rest of the world,” the research reads.
In other central banking news, the central bank in Brazil he opted for a shock increase of 100 basis points and reported two more on the way. In India, however, there is a new RBI governor, who the market has widely perceived as more accommodating than the outgoing governor.
Drilling down more specifically into Frankfurt’s choices, BofA says the ECB cut the deposit rate by 25 basis points, as widely expected, but slightly surprised with a relatively forceful move away from an aggressive stance. “For now, the message is clear, la ECB is heading towards neutrality, wherever that may beat a rate determined by the data, meeting by meeting,” is emphasized.
“However, the change in communication makes us feel comfortable that the ECB is leaving the door open to drop below neutrality – it is highlighted – This includes eliminating reference to restrictive rates for the foreseeable future, suggesting a return to 2% “on a sustained basis” and assessing inflation risks as bilateral with forecasts showing a core below 2%. We continue to expect the deposit rate to reach 1.5% by September.”