Policy interest rates hit peak as Fitch foresees impending rate cuts

News Image

MG News | December 22, 2023 at 09:36 AM GMT+05:00

0:00

December 22, 2023 (MLN): Policy interest rates in the US, eurozone and UK have been on hold since 3Q23 and have now likely reached peaks for this tightening cycle, Fitch Ratings said in its latest report.

Following recent dovish comments from Fed Chairman Jay Powell, Fitch now expects the next moves from the Fed, ECB and Bank of England (BOE) to be rate cuts, although easing will be slower and shallower than currently expected by financial markets.

The rating agency expects policy rates to fall by 75bp by the end-2024 in all three economies, taking the Fed Funds rate (upper band) to 4.75%, the ECB Main Refinancing Rate to 3.75% and the BOE Bank Rate to 4.5%.

Major central banks have kept their policy rates unchanged in recent months and headline CPI inflation rates have fallen quite quickly, as highlighted in Fitch’s latest ‘20/20 Vision’ chart pack.

Earlier monetary policy tightening has resulted in household and corporate credit flows rapidly slowing.

US household debt growth (seasonally adjusted annual rate) fell in 3Q23 to 2.5% and non-financial corporate debt growth slowed to just 1.5%, well down on rates seen in late 2022.

The fall in credit growth is even more pronounced in the eurozone, where both household and corporate credit growth rates fell to the lowest levels seen in many years. In particular, loans to non-financial corporates contracted in October by 0.3% yoy, the first outright contraction since July 2015.

The UK, Switzerland and Canada have also seen credit growth sharply slow.

Headline CPI inflation continues to decline among the majority of Fitch20 economies, with some notable exceptions, including Russia and Turkiye.

"Both export and import volumes contracted on an annual basis in recent months in the US, eurozone, Japan and UK, among others. Chinese export volume growth also remains subdued," the report reads.

Copyright Mettis Link News

Related News

Name Price/Vol %Chg/NChg
KSE100 138,412.25
167.69M
0.32%
447.43
ALLSHR 85,702.96
423.92M
0.15%
131.52
KSE30 42,254.84
82.09M
0.43%
180.24
KMI30 194,109.59
84.37M
0.15%
281.36
KMIALLSHR 56,713.67
217.03M
0.03%
16.37
BKTi 37,831.34
13.04M
1.62%
603.62
OGTi 27,440.63
3.93M
-0.09%
-23.70
Symbol Bid/Ask High/Low
Name Last High/Low Chg/%Chg
BITCOIN FUTURES 118,605.00 118,705.00
117,905.00
985.00
0.84%
BRENT CRUDE 73.47 73.63
71.75
0.96
1.32%
RICHARDS BAY COAL MONTHLY 96.50 0.00
0.00
2.20
2.33%
ROTTERDAM COAL MONTHLY 104.50 104.50
104.50
-0.30
-0.29%
USD RBD PALM OLEIN 998.50 998.50
998.50
0.00
0.00%
CRUDE OIL - WTI 70.35 70.37
70.18
0.35
0.50%
SUGAR #11 WORLD 16.46 16.58
16.37
-0.13
-0.78%

Chart of the Day


Latest News

Top 5 things to watch in this week

Pakistan Stock Movers
Name Last Chg/%Chg
Name Last Chg/%Chg