Major central banks were seen keeping interest rates on hold in January, in line with an expected change in tone in global monetary policy, while several other emerging market countries continued to cut rates.
January saw six of the central banks overseeing the 10 most traded currencies – the US Federal Reserve, the ECB, the Bank of Japan, the Bank of Canada, the BoE and Norges Bank in rate-setting meetings without any change.
"Interest rates are expected to remain a key focus in 2024," Philip Shaw at Investec said in a research note. "However, unlike the last two years, the question is not how much the central bank will raise rates, but when and how much they will lower them."
Fed Chairman Jerome Powell on Thursday provided broad support for the strength of the US economy and said the next rate move would be lower. But he also dismissed market speculation about a move in March, with expectations now expecting the Fed's first rate cut in May.
Five of 18 central banks in developing countries according to Reuters cut rates in January to match the December total, which was the highest amount in at least three years. Across Reuters' market sample, 12 central banks held rate-setting meetings last month.
Policymakers in Brazil, Hungary, Colombia, and Chile are all expanding their easing efforts. The measures brought the total rate reduction in January to 275 basis points, the largest monthly amount since May 2022.
Turkey was the only exception in January, delivering another 250 basis point rate hike to stabilize its battered currency and tackle high inflation, although the central bank said it had now completed its aggressive tightening cycle.
