Global central banks hit pause in October after September hiking spree

Global Central Banks Pause Rate Hikes in October as Inflation Pressures Linger

By Karin Strohecker and Sumanta Sen

Central Bank Rate Decisions and Inflation Dynamics in October

Overview of G10 Central Bank Actions

LONDON, Nov 4 (Reuters) - Global central banks largely hit the pause button in October after a round of rate hikes the previous month, though policymakers and analysts signalled that stubborn inflation pressures meant the tightening cycle was not necessarily over.

Individual Central Bank Moves

Canada's central bank was the only one among those overseeing the 10 most heavily traded currencies to hike rates in October, while the US Federal Reserve, the European Central Bank, New Zealand and Japan held steady. Central banks in Switzerland, Australia, Sweden, Norway and Britain held no rate-setting meetings.

Rate Hike Statistics and Commentary

G10 central banks have delivered 350 basis points of tightening through 14 hikes this year, with none cutting rates.

"The Fed, the ECB, and the BoJ left their rates unchanged," said Anis Bensaidani, an economist who covers the United States and Japan at BNP Paribas. "This pause, however, does not mark the end of the cycle."

Market Context and Inflation Concerns

The October lull followed a busy September, when six G10 central banks delivered a combined 150 basis points of hikes, the biggest monthly tightening push since June 2023.

The pause came against a backdrop of rising oil prices, with Brent crude futures posting double-digit percentage gains in both September and October, raising the prospect of renewed inflation pressures.

"Policy is tight, but probably not tight enough yet," said Ryan Sweet, chief global economist at Oxford Economics, pointing to central banks hinting that more rate hikes were to come.

"The degree of future tightening will mostly hinge on the path of inflation, but lingering questions are whether monetary policy is restrictive and how much additional tightening will be sufficient to return inflation to target."

Emerging Market Central Bank Activity

The relative lull was also visible across emerging economies.

Emerging Market Rate Changes

Two central banks from a Reuters sample of 18 developing economies, the Philippines and India, hiked rates by a total of 75 bps in October.

Another 10 central banks that held meetings kept benchmark rates unchanged, while Turkey resumed its easing cycle after an eight-month break, cutting rates by 100 bps.

Year-to-Date Emerging Market Trends

Year-to-date, central banks in the emerging market sample have delivered a combined 675 basis points of tightening through 16 hikes and 850 basis points of easing through 25 cuts.

(Reporting by Karin Strohecker and Sumanta Sen; Editing by Sharon Singleton)