Published by Global Banking and Finance Review
Posted on January 7, 2025
By Karin Strohecker and Sumanta Sen
LONDON (Reuters) - Major central banks in December delivered their biggest policy easing push since the spring 2020 COVID rate-cutting frenzy, with the latest moves making the annual 2024 easing effort the biggest in 15 years as policymakers brace for unsteady times.
Among central banks overseeing the 10 most heavily traded currencies, five of the nine that held meetings in December cut interest rates. Central banks in Switzerland and Canada shaved off 50 basis points (bps) each, while the Federal Reserve, the European Central Bank and Sweden's Riksbank trimmed benchmarks by 25 bps each.
Policymakers in Australia, Norway, Japan and Britain left interest rates unchanged, while New Zealand did not hold a meeting.
The latest moves come ahead of Donald Trump taking over the White House on Jan. 20, with uncertainty over how aggressively the U.S. President-elect will pursue his trade and economic policies keeping markets on edge.
December marked the biggest monthly tally of rate cuts across G10 central banks since March 2020, when turmoil over the COVID pandemic roiled global markets. The latest moves took the 2024 rate cut total to 825 bps - the biggest annual easing effort since 2009.
"2024 was another strong year for asset returns, as economic growth surprised on the upside and central banks finally began to cut rates," said Henry Allen, macro strategist at Deutsche Bank.
"Yet despite the generally upbeat performance, there were plenty of bumps along the way. Rate cuts took longer than many expected," Allen added.
Across emerging markets, 14 of a Reuters sample of 18 central banks in developing economies held rate-setting meetings in December. Turkey delivered an eye-catching 250 bps cut, while Mexico, Colombia, Chile and the Philippines lowered rates by 25 bps each.
Meanwhile, Brazil ramped up its tightening cycle, lifting its key interest rates by 100 bps.
The moves in emerging markets took the 2024 tally of cuts to 2,160 bps from 51 moves - more than double the 945 bps of easing in 2023. Total hikes for emerging markets in 2024 stood at 1,450 bps.
"Notable efforts to contain inflation and stabilise markets coexisted with energy volatility and contrasting dynamics between advanced and emerging economies, against a backdrop of global transformation," said John Plassard at Mirabaud.
"The year just ended will be one to remember."
(Reporting by Karin Strohecker and Sumanta Sen. Editing by Dhara Ranasinghe and Mark Potter)
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