Global central banks plan interest rate cuts in 2024

Central banks around the globe are changing their game plan over the next 12 months, transitioning from aggressive tightening to an era of interest rate cuts.

Between 2021 and 2023, central banks hiked rates more than 300 times. The shift would allow banks to adjust their interest rate policy in response to moderating inflation and the ideal level of economic growth.

The trend, highlighted by Bloomberg Economics, reveals that these banks, including the US Federal Reserve, are likely to reduce interest rates by a total of 128 basis points through 2024.

The move is mainly led by countries that are still growing but need a bit of a financial breather, like Brazil and the Czech Republic.

In the US, policymakers forecast 75 basis points of cuts for the year, diverging from earlier indications of hikes in 2024.

Other major banks, such as the European Central Bank, might reduce rates as well, possibly in June. Even in countries like the UK and Canada, there are hints that interest rates might go down.

Despite optimism surrounding the policy pivot, some are still worried about inflation. 

US consumer prices increased 0.3% in December, but the core inflation measure, which strips out volatile food and energy items, came in at 3.9% in the year through December, down from 2022’s 4%.