The global economy faces a sharp rise in rates.

Oct 9
It's possible that the new era of global monetary policy, which is guided by the "higher and longer" tenet, may only run through the first quarter of 2024 before central banks start to move in the direction of lowering borrowing costs.
Bloomberg Economics predicts that the overall gauge of global interest rates will start to rapidly decrease in the first quarter. This change will only take a little longer in sophisticated economies before they synchronize downward as well.
By the end of the year, only two out of the 23 central banks are anticipated to delay rate cuts, and Turkey's borrowing costs, which are vulnerable to inflation, are anticipated to remain stable while the Bank of Japan eases out of its loose monetary policy.
 
The Federal Reserve Chairman Jerome Powell's announcement in August that advanced economies were at a "higher for the long haul" plateau is expected to endure no longer than three quarters. Before the middle of the year, rate cuts in the US and the eurozone are anticipated, with the UK and Sweden delaying their moves a little.
The global aggregate rate will have decreased by more than 125 basis points by the end of the next year, with lesser decreases of roughly half that magnitude anticipated in the richest nations of the world, nevertheless contributing to a noticeable relaxation.
 
According to Bloomberg Economics' prediction, the cycle of monetary tightening is about to change. It also serves as a reminder that the ultra-low-rate era before it won't be returning any time soon, as officials are reluctant to ease rates too much in this turbulent time, which European Central Bank President Christine Lagarde refers to as "the era of shifts and breaks."
According to the average prediction of policymakers given in September, rates will reach 5.6% by the end of 2023, with 12 of 19 officials planning an additional 25 basis point increase.
 
Some Fed officials, including Chairman Powell, emphasized that the U.S. central bank may "tread carefully," indicating that they are not in a haste to raise interest rates and will instead base their choices on evidence. They have made it clear that rates will need to stay high after 2023 for a longer period than they had anticipated to return inflation to the 2% target.
"The peak in central bank rates around the world is quickly approaching. We don't believe the Fed will need to raise rates again, but it's a very real possibility, according to Bloomberg Economics analysts.

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