Goldman Sachs expects continued monetary policy easing across the world next year
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GOLDMAN SACHS EXPECTS CONTINUED MONETARY POLICY EASING ACROSS THE WORLD NEXT YEAR
Goldman Sachs has laid down its expectations on global interest rates for 2025, expecting significant cuts across both emerging and developed market economies.
Goldman expects global central banks to lower policy rates from 5.2% to 5.1% (on a GDP-weighted basis) by end of 2024, and to 3.8% by end of 2025.
They anticipate 116 basis-points of easing on average across developed markets over the next four quarters, reflecting large rate declines in New Zealand (175 bps) and 150 bps of easing in the Euro Area, Canada and Hong Kong.
Japan is an outlier, with Goldman expecting a 50bp increase over the next four quarters.
Goldman expects an average of 114 bps of easing across emerging markets in the next 12 months, reflecting heavy cuts in the Central Eastern Europe, Middle East and Africa (CEEMEA) regions, excluding Turkey and Egypt.
Over the last three months, DM central banks have continued to cut rates, with 51.9% (on a GDP-weighted basis) lowering policy rates and the remainder staying on hold. EM central banks have also begun to follow suit, with 25.9% lowering rates over the last three months, and only Brazil and Russia delivering hikes.
At the country level, financial conditions have tightened the most over the last three months in Brazil (93bps), Russia (54.3bps) and Mainland China (52bps), and eased the most in Hungary (-51bps), Canada (-40bps) and Sweden (-35bps).
(Shashwat Chauhan)
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