"We are approaching the end of the global hiking cycle, we are at an inflection point," said Omar Slim, co-head of Asia ex-Japan fixed income at PineBridge Investments.
However, whilst the developed market tightening cycle was in its final throes, policy makers had still some lose ends to tie up in May with Australia's central bank surprising markets with an interest rate on Tuesday and policy makers at the U.S. Federal Reserve and European Central Bank - neither of which met last month - expected to deliver more hikes in coming days.
"The Fed is widely anticipated to hike but likely to maintain a tightening bias to provide optionality for another hike if inflation doesn't comply," said Mark McCormick at TD Securities.
In emerging markets, further signs of a slowdown in the rate hike push became evident. Eleven out of 18 central banks in the Reuters sample of developing economies met to decide on rate moves, but only policy makers in Israel and Colombia hiked by a cumulative 50 bps. China, Indonesia, India, Korea, Russia, Turkey, Hungary, Poland and Chile all decided to stay put.
That compares to fourteen central banks in developing economies meeting in March with five hiking by a total of 150 bps.
In a sign that a pivot to rate cuts was on the cards for emerging markets, Uruguay's central bank - which is not part of the Reuters sample - cut its benchmark interest rate by 25 basis points last Wednesday, becoming the first to reduce interest rates in the region. Analysts said policy makers in developing economies elsewhere were not far behind.
Central banks across Central and Eastern Europe provided firmer signs in recent days that with inflation now declining monetary loosening may soon be on the cards, said Nicholas Farr, Emerging Europe Economist at Capital Economics.
"But there are still clearly big concerns that inflation
will be slow to fall back to central banks’ targets, and we
think that interest rates will be cut by less than most analysts
expect over the next couple of years," Farr added.
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Developed markets central banks Emerging markets central banks ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Karin Strohecker and Vincent Flasseur; Editing by
Lincoln Feast.)
