Global Central Banks Set for Major Interest Rate Moves

This week marks a pivotal moment for central banks worldwide, with several poised to announce interest rate changes. The U.S. Federal Reserve’s two-day meeting, starting Tuesday, is at the forefront, with widespread expectations of a rate cut. 

While most traders anticipate a quarter-point reduction, 41% predict a half-point move. Currently, the Fed's target rate stands between 5.25% and 5.5%. Some economists argue for a 50-basis-point cut, suggesting the Fed had previously tightened too aggressively. Others warn that such a move could destabilize markets, advocating instead for a more conservative 25 basis points.

Brazil's central bank is also in focus, with strong Q2 economic data prompting expectations of a rate hike in September. Banco Central is projected to raise the Selicrate by 25 basis points to 10.75%, potentially reaching 11.50% by the end of 2024.

In the UK, the Bank of England is not expected to change rates on Thursday, with a Reuters poll indicating all 65 surveyed economists foresee rates holding at 5%. The BOE delivered its first rate cut in over four years in August. 

Meanwhile, South Africa's Reserve Bank may cut rates for the first time since the pandemic. Norway's NorgesBank, holding rates at a 16-year high of 4.5%, is likely to keep rates steady. The Bank of Japan is not expected to raise rates this week, but a rate increase by year-end seems possible. This flurry of central bank activity reflects differing responses to complex global economic dynamics.