# Central banks ease off on rate hike push in October
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-02
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Global Central Banks Slow Pace of Rate Hikes in October Amidst Market Uncertainty
Meta Description: Discover how major central banks scaled back rate hikes in October after a rush in September, indicating a potential slowing trend in tightening policies
URL: https://financedigest.com/central-banks-ease-off-on-rate-hike-push-in-octoberhtml

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By Karin Strohecker and Vincent Flasseur

LONDON (Reuters) – The pace and scale of rate hikes delivered by central banks around the globe in October slowed down dramatically following September’s historic peak.

Central banks overseeing four of the 10 most heavily traded currencies delivered 200 basis points of rate hikes between them last month, while the remaining ones held rates. Policy makers at the European Central Bank, the Reserve [Bank of Australia, the Reserve Bank of New Zealand and the Bank of Canada](https://www.financedigest.com/bank-of-canada-seen-on-hold-even-as-economy-accelerates.html "Bank of Canada seen on hold even as economy accelerates") raised lending rates.

By comparison, eight of the same 10 [central banks raised rates](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") by a combined total of 550 bps in September, the fastest pace of tightening in at least two decades.

The latest moves have brought total [rate hikes](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") in 2022 from G10 central banks to 2,050 bps.

The pace of [central bank tightening](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") has likely peaked,” said Marko Kolanovic at JPMorgan in a note to clients.

More dovish rhetoric from the ECB, BoC, Fed and RBA recently [indicate the pace of central bank](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") tightening is likely to slow in the coming months, though it is early to assess whether this means a lower terminal rate.

(G10 [interest rates](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") https://graphics.reuters.com/GLOBAL-MARKETS/mypmomxdjpr/G10CENOCT22.gif)

Markets had recently taken heart from indications that [rate hikes](https://www.financedigest.com/dollar-hits-one-month-high-against-yen-as-traders-bet-on-fed-rate-hike.html "Dollar hits one-month high against yen as traders bet on Fed rate hike") from major central banks – especially the U.S. Federal Reserve – were slowing down.

However, any optimism on that front might be premature, said Jean Boivin, [head of the BlackRock Investment](https://www.financedigest.com/hsbc-appoints-new-markets-head-amid-wider-investment-bank-reshuffle.html "HSBC appoints new markets head amid wider investment bank reshuffle") Institute.

We see [central banks](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") on a path to overtighten policy,” said Boivin on Monday in a weekly outlook note from the world’s largest asset manager.

We think the Fed, like other developed market central banks, will only stop when the severe damage from [rate hikes](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") is clearer. [Rates have already hit](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") levels that may trigger recessions, in our view.

Policy makers and analysts have warned of a [rising risk](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") of recession, especially in Europe.

Data from emerging market [central banks](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") painted a similar picture. Five out of 18 central banks [delivered 325 bps of rate hikes](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike") in October – less than half of September’s tally and well below the monthly tally of 800-plus basis points in both June and July.

Indonesia, South Korea, Israel, Colombia and Chile all raised interest rates with the hiking cycle also [nearing its end](https://www.financedigest.com/exclusive-nissan-seeks-tech-tie-up-without-renault-as-alliance-nears-end-of-road.html "Exclusive-Nissan seeks tech tie-up without Renault as alliance nears end of road") though there are some differences in near-term trajectories. While policy makers in Chile indicated that no more rate hikes were in the offing for now, Israel’s central bank said it saw [rates rising](https://www.financedigest.com/uk-inflation-rate-unexpectedly-rises-to-10-4-in-february.html "UK inflation rate unexpectedly rises to 10.4% in February") to levels above current levels.

Meanwhile outlier Turkey, where President Tayyip Erdogan is [pushing for lower interest rates](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high"), delivered a bigger-than-expected 150 bps benchmark cut despite inflation at above 80%.

The extent of the cost-of-living pressures are highly de-synchronised across the EM complex, with clear [winners and losers,”](https://www.financedigest.com/the-pound-gilts-and-stocks-likely-winners-and-losers-from-uk-budget.html "The pound, gilts and stocks: likely winners and losers from UK budget") said Ehsan Khoman at MUFG.

In total, emerging [market central banks have raised interest rates](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets") by a total 6,765 bps year-to-date, more than double the 2,745 bps for the whole of 2021, calculations show.

(Emerging [markets interest rates](https://www.financedigest.com/no-santa-rally-for-markets-as-central-banks-dampen-peak-rate-hopes.html "No Santa rally for markets as central banks dampen peak rate hopes") https://graphics.reuters.com/GLOBAL-MARKETS/gkplwmaravb/EM18CENOCT22.gif)

(Reporting by Karin Strohecker and Vincent Flasseur; Editing by Alexandra Hudson)


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