Developed market central banks keep rates steady as policy makers watch US trade policy shifts
Emerging market central banks launched their sharpest collective policy easing in years in July, according to Reuters, as seven from a sample of 18 developing economies delivered a total of 625 basis points (bps) in cuts — the largest monthly reduction since at least 2022.
Turkey led with a 300-bp move, followed by Russia’s 200-bp reduction.
Central banks in Indonesia, South Africa, Malaysia, Poland and Chile each cut by 25 bps, while six others left rates unchanged.
Roger Mark, analyst in the fixed income team at Ninety One, said the drivers were highly country-specific, citing South Africa’s new inflation target and Turkey’s focus on lira stability.
He noted divergence in inflation patterns and in how sensitive each economy is to developments in the United States and the European Central Bank (ECB).
In contrast, developed market policy makers held rates steady, reported Reuters, with all six central banks overseeing the 10 most traded currencies that met in July — Australia, New Zealand, Japan, the ECB, Canada and the United States Federal Reserve — opting for no change.
Sweden, Switzerland, Norway and the Bank of England did not hold meetings during the month.
Policy makers in these economies signalled caution, according to Reuters, weighing the impact of US trade policy deadlines and recent announcements.
While August is typically quiet on the monetary policy front, September could bring decisions from major banks such as the Federal Reserve.
Dario Perkins at TS Lombard said the developed market easing cycle has been unsynchronised, with some central banks expected to act in 2026.
Year-to-date figures show G10 central banks have implemented 500 bps in cuts across 19 moves, with only one hike — 25 bps by the Bank of Japan.
Emerging economies, by comparison, have delivered 1,910 bps in cuts through 32 moves and enacted 625 bps in hikes, including four in Brazil and one in Turkey.
