While the fight against inflation continues globally, some major central banks, primarily the US Federal Reserve (Fed), did not change their monetary policies in March. In March, the Fed, the Bank of England (BoE), the Bank of Japan (BoJ), the Russian Central Bank, the Czech National Bank (CNB), the Hungarian National Bank (MNB), the Polish National Bank, the Swedish National Bank (Riksbank), and the Norwegian National Bank all decided to keep their policy interest rates unchanged.
The effects of the US’s protectionist trade stance and the dilemma between inflation and recession remain among the important issues on the agenda of economies worldwide.
Central banks are taking a cautious approach as they continue their fight against inflation, due to potentially changing trade strategies and uncertainties in the global economy.
Concerns that the US’s protectionist trade policy could increase inflationary pressures and negatively impact growth are influencing the decisions of other major economies. In March, the Fed, the Bank of England (BoE), the Bank of Japan (BoJ), the Central Bank of Russia (CBR), the Czech National Bank, the Hungarian National Bank (MNB), the Polish National Bank, the Swedish National Bank (Riksbank), and the Norwegian National Bank all decided to keep their policy interest rates unchanged.
The Bank of Canada (BoC), the Swiss National Bank (SNB), and the Central Bank of the Republic of Turkey (TCMB) all implemented interest rate cuts.
The Fed, as expected, kept its policy interest rate unchanged at 4.25-4.50 percent in March. The fact that the bank did not change its forecast for the federal funds rate keeps the possibility of two interest rate cuts this year on the agenda. The monetary policy decision statement included the phrase “Uncertainty regarding the economic outlook has increased,” while the inflation forecast for this year was revised upwards and the growth forecast downwards. The Fed also announced that the pace of balance sheet reduction would be slowed.
The statement noted that the unemployment rate has stabilized at low levels in recent months and that the labor market remains strong. However, it stated that inflation remains somewhat high. Fed Chairman Jerome Powell, in a press conference, stated that tariffs could delay progress in reducing inflation.
The Bank of England (BoE) also kept its policy interest rate unchanged, in line with market expectations. According to the Bank of England’s statement, eight members, including Governor Andrew Bailey, favored keeping the policy rate at 4.5 percent. One member argued that the rate should be lowered to 4.25 percent. The statement noted that significant progress had been made in the disinflation process over the past two years, and this progress allowed for keeping the policy rate at a restrictive level in order to continue reducing persistent inflationary pressures.
Source: Dunyagazetesi
