EM central banks plough on with easing in July as major peers linger

By Karin Strohecker and Sumanta Sen

LONDON (Reuters) -Emerging market central banks implemented their largest rate-cutting push in years in July, while their developed market counterparts held steady as uncertainty over U.S. trade and tariff policies reverberated across global economies.

Seven central banks from a Reuters sample of 18 developing economies delivered 625 basis points (bps) of cuts - the highest monthly cut since at least 2022 - in July, data showed.

The moves were driven by policy makers in Turkey returning to easing with a 300-bp cut and Russia's central bank pegging the benchmark 200 bps lower. Central banks in Indonesia, South Africa, Malaysia, Poland and Chile all reduced rates by 25 bps each in July, while another six opted for no change.

Across developing economies, idiosyncratic stories were dominating, said Roger Mark, analyst in the fixed income team at Ninety One.

"We've got South Africa targeting a new inflation target. We've got Turkey, where the focus is all about trying to keep the lira stable," said Mark.

"It does vary a lot by country and we're seeing divergence in inflation, and divergence to an extent in the sensitivity to what's happening in the U.S. and the ECB," he said, adding for developed economies' central banks it was more a degree of "wait and see."

Meanwhile, the picture looked less dynamic in developed economies, with policy makers warning of uncertainty ahead

and growth and inflation trajectories in flux.

All six of the central banks overseeing the 10 most heavily traded currencies that held meetings in July kept rates on hold - namely Australia, New Zealand, Japan, the ECB, Canada and the United States Federal Reserve. Sweden, Switzerland, Norway and the Bank of England did not hold rate-setting meetings last month.

Policy makers were sifting through the impact from the U.S. trade policy with a raft of deadlines and announcements having come out in recent days and more deadlines ahead.

While August tends to be quiet on the monetary policy front, September is expected to bring more moves from major central banks, such as the Fed.

"The developed market monetary-easing cycle hasn’t been entirely synchronised, and there are some central banks that have fallen behind," said Dario Perkins at TS Lombard.

"Current market pricing suggests these central banks (the Fed, the BoE etc.) will catch up in 2026."

The year-to-date tally across G10 central banks on rate cuts is 500 bps across 19 moves, while on hikes there was just one 25 bps move by the Bank of Japan.

Across emerging economies, year-to-date rate cuts stood at 1,910 bps across 32 moves while rate rises tallied up to 625 bps through four hikes in Brazil and one in Turkey.

(Reporting by Karin Strohecker and Sumanta Sen, editing by Harikrishnan Nair)