8 to 14 July: Central banks across the globe await the Fed’s green light
We covered the Federal Reserve’s policy U-turn extensively during the previous weeks: a 25bp rate cut and pausing the balance sheet run-off at the end of July seem like a done deal. Now, it is time to look around what other central banks across the globe could do. In general, central banks operating in a benign inflationary environment and in economies that are not too susceptible to external shocks may find room for policy manoeuvre to ease financial conditions in the coming months either by outright slashing their policy rates and/or by injecting additional liquidity into their domestic money markets (e.g. Indonesia, the Philippines, Brazil, Chile, Peru, South Africa, Egypt, etc.). As a result, emerging economies will enjoy the benefits of (increasingly) accommodative monetary stances and will exhibit stronger domestic economic activity.