After the Fed cut rates last week, many central banks followed.September 23, the Swedish central bank cut rates for the fourth time in the year, and has so far cut rates eight times, aimed at supporting the economy and stabilizing inflation.Previously, Peru, Turkey, Canada, Indonesia and other countries have also cut rates.Chairman of the Fed Powell said that increased risks to the job market are key, this move is a step in the policy position toward "neutrality", and stressed that there is no future policy direction and will continue to determine the appropriate position.
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Since the Federal Reserve announced the rate cuts last week, several national central banks have followed the rate cuts.
According to the Securities Times, on September 23, the Swedish Riksbank announced that it would cut the policy rate by 25 basis points to 1.75%. This is the fourth time the Swedish central bank has cut interest rates this year. Since the start of the interest rate cut cycle in May 2024, the Swedish Riksbank has cut interest rates eight times so far, and the policy rate has been lowered from 4% to 1.75%.
According to a statement issued by the Swedish Central Bank, the interest rate cuts are aimed at further supporting economic activity and stabilizing inflation at the target level in the medium term, and if the prospects for inflation and economic activity remain unchanged, policy rates are expected to remain at this level for a period of time to come.
Sweden's inflation remained high in August, but core inflation, which excludes energy prices, fell, close to the forecast of the June monetary policy report. The Riksbank believes that the current level of inflation will not last long as companies lower commodity prices and the Swedish krona strengthens. In addition, the tax cuts announced by the government will temporarily slow inflation next year, but will not have a material impact on inflationary pressures.
According to data from the Swedish Bureau of Statistics, the consumer price index (CPI) increased by 1.1% in August, up from 0.8% in July for the sixth consecutive month, reaching its highest level in six months, in line with the preliminary forecast released on September 4.
Last week, the Fed dropped interest rates like a stone in the pool of the global economy. Before the Fed dropped interest rates, several central banks such as Peru, Turkey, and Canada had “racked” interest rates.
According to brokerage China, on the morning of September 12, Beijing time, the Peruvian central bank announced that it would cut interest rates by 25 basis points, lowering the benchmark interest rate from 4.50% to 4.25%. That's in line with the forecast of eight of 15 economists surveyed by Bloomberg, and seven others expect Peru's central bank to keep interest rates unchanged for the fourth time in a row.
Before the Peruvian central bank took action, the Turkish central bank announced on September 11, local time, that the Monetary Policy Committee decided to cut the benchmark interest rate from 43% to 40.5%, with an interest rate cut of 250 basis points, a drop exceeding market expectations of 200 basis points.
The next day the Fed announced the rate cuts, the Indonesian central bank announced that it would lower the benchmark rate by 25 basis points to 4.75 percent. This was the bank's fifth rate cuts since 2025, beyond market expectations. As the largest economy in Southeast Asia, Indonesia has cumulatively lowered the benchmark rate by 125 basis points this year, while the rate cuts are less than a month away from the last adjustment. Though the Brazilian central bank kept the rate unchanged at its 18th budget meeting, Brazil's Treasury Minister Fernando Hadad said he expects to start cuts in the coming months thanks to Brazil's good foreign exchange prospects.
On September 23, local time, Federal Reserve Chairman Powell stated on policy trends and economic situation, pointing out that rising risks in the job market are the key reasons that prompted the Federal Reserve to take interest rate cuts last week.
Powell said the move was a step in the policy position’s shift to “neutral” and stressed that there was no forward-looking policy direction. He acknowledged that the current inflation level is still slightly higher than the target, with the core PCE inflation rate expected to be 2.3% in August, where the rise in commodity prices mainly reflects the impact of tariffs rather than widespread inflation pressure.
According to the Shanghai Securities News, Powell broadly reiterated his views at the press conference after last week's interest rate cut, saying that short-term inflation risks are on the upside and employment risks are on the downside, emphasizing the challenges facing the Fed in balancing its dual missions. Powell said that if the Fed loosens policy too aggressively, it may fail to achieve its inflation target. If the Fed maintains restrictive policy for too long, the labor market may experience unnecessary weakness.
Powell said that even after last week's interest rate cuts, the Fed's current policy position remains slightly limited, stressing that the Fed's policy is not a predetermined route and will continue to determine the appropriate position based on future data, changing outlook and risk balance.
Daily Economic News Comprehensive Central TV News, Securities Times, Shanghai Securities Journal, Securities China
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