The central bank’s latest report has been released! It hints at the policy direction for 2024.

Moreover, Leverage Games observes that the central bank will continue to intensify monetary policy support for private and micro/small enterprises. We will not cite specific data here. The focus will be on implementing already-announced policy documents and making systematic arrangements for financial support of private-sector economic development, guiding financial institutions to embrace the principle of 'equal treatment'... 6. The interest-rate hiking cycles in major economies are nearing their end. 1) In July, the U.S. Federal Reserve raised its benchmark rate by 25 basis points, lifting the federal funds rate target range to 5.25%–5.5%. It paused hikes in September and November; Fed Chair Powell stated that future policy decisions will be based on ongoing assessments of the economic outlook and associated risks. Meanwhile, the Fed continues its balance-sheet reduction (quantitative tightening) as planned. 2) The European Central Bank (ECB) raised rates by 25 basis points each at its July and September meetings, then paused in October. Its main refinancing operations rate, marginal lending facility rate, and deposit facility rate now stand at 4.5%, 4.75%, and 4%, respectively. Starting in July, the ECB ceased reinvesting principal repayments from maturing securities under its Asset Purchase Programme (APP). 3) The Bank of England raised its base rate by 25 basis points to 5.25% in August, paused further hikes in September, and announced plans to sell £100 billion of UK government bonds over the next 12 months, reducing its gilt holdings to £658 billion. 4) The Bank of Japan maintained its short-term policy rate at -0.1% and its 10-year JGB yield target near 0%, but enhanced flexibility in its Yield Curve Control (YCC) framework—introducing 1% as a reference upper bound for yield fluctuations. 5) Additionally, Canada’s central bank raised rates by 25 basis points in Q3; Australia’s, South Korea’s, and New Zealand’s central banks held their benchmark rates steady. 6) Monetary policies among emerging-market economies are diverging. Leverage Games notes that in Q3, central banks in Argentina, Turkey, Russia, and Egypt raised rates by 2,100, 1,500, 550, and 100 basis points, respectively; those in India, Mexico, Indonesia, Malaysia, and South Africa held rates unchanged; while Chile’s and Brazil’s central banks cut rates by 175 and 100 basis points, respectively. 7. Notable issues and trends. 1) Economic growth has yet to rebound to pre-pandemic levels. Geopolitical tensions remain complex and volatile: the Russia-Ukraine conflict persists, and the Israel-Hamas war has intensified. The cumulative effects of interest-rate hikes in advanced economies continue to weigh on global growth momentum. The World Trade Organization forecasts global trade growth in 2023 at just 0.8%, far below 2.7% in 2022. The International Monetary Fund (IMF) projects global GDP growth in 2023 will slow to 3% from 3.5% in 2022—well below the 3.8% average recorded between 2000 and 2019. 2) Inflationary pressures persist amid high interest rates. Since 2023, inflation pressures in major advanced economies have generally eased but remain above target levels; central banks in these economies may maintain elevated interest rates for an extended period. Currently, labor markets in the U.S. and Europe remain tight, wage growth remains robust, and services inflation (excluding rents) remains stubbornly high—suggesting continued risk of a 'wage-price spiral.' Meanwhile, energy prices could fluctuate again due to extended oil production cuts by major exporters and heightened tensions in the Middle East. 3) Global debt levels are at historic highs. IMF data show global debt reached $235 trillion in 2022—equivalent to 238% of global GDP—up 9 percentage points from 2019.

A north-south divergence in monetary policy is becoming increasingly evident.

Federal Reserve Chair Jerome Powell reaffirmed the 2% inflation target, stressing that although inflation has eased, it remains too high. Even before this meeting, intense debate had surrounded whether the 2% target remains appropriate in the post-pandemic era—but '2% is 2%' appears to be the Fed’s firm bottom line and unwavering objective. Although the European Central Bank (ECB) signaled after its July hike that it might be the last, ECB President Christine Lagarde clarified in the subsequent press conference that the ECB’s monetary policy stance could involve either maintaining current rates or raising them further—but would not include rate cuts. At the Jackson Hole symposium, Lagarde stated: 'Under current conditions, the ECB can set interest rates at a sufficiently restrictive level for as long as necessary to ensure inflation returns promptly to our 2% medium-term target.' The Bank of England is pursuing increasingly aggressive monetary policy: following its scheduled 25-basis-point hike in early August, it still maintains that such action helps avoid recession. With labor-market pressures only beginning to ease—and job vacancy rates only recently falling toward more normal levels—the BoE retains limited room to pause further hikes. Canada’s central bank, in its July statement, indicated that supply-demand rebalancing is expected to occur three quarters later than previously forecast—only by early next year—and that inflation’s stickiness will exceed earlier expectations; returning to the target range may not happen until mid-2025. Although many observers believe this round of hikes may mark the Bank of Canada’s final increase, a prolonged period is still anticipated before rates begin to decline. After holding rates steady in early August, the Reserve Bank of Australia (RBA) projected that although inflation is declining, it will take 24 months—or even longer—to fall from its current 6% level into the 2%–3% target band, with considerable uncertainty surrounding the timeline. The RBA also noted it will assess the lagged effects of prior hikes and may need to tighten policy further. Emerging Markets Enter a Rate-Cut Cycle While advanced-economy central banks continue hiking rates and sustaining restrictive monetary stances, an increasing number of investors observe starkly different policy positions across emerging-market economies. Having adopted more proactive measures against inflation since early 2021, most emerging markets have experienced more pronounced disinflation. Accordingly, data released by the Bank for International Settlements (BIS) at the end of July show that, since the start of this year, central banks in Brazil, Chile, Indonesia, and nine others have either implemented further easing or held benchmark rates steady; India, Morocco, Mexico, and Malaysia, having hiked earlier in the year, subsequently held rates unchanged; while the Philippines, Thailand, South Africa, and Serbia remain on a hiking path—having raised rates twice consecutively. Data indicate that, as of end-July, emerging-market central banks collectively executed 24 rate hikes totaling 1,725 basis points—a level far below the 92 hikes and 7,425 basis points recorded in 2022. Current trends suggest that most emerging-market central banks—including those of Indonesia, Mexico, South Africa, India, and Poland—will hold benchmark rates steady and opportunistically initiate rate cuts ahead of the Fed abandoning its hiking cycle or signaling future rate cuts. Meanwhile, certain emerging economies—such as Brazil and Chile—have clearly outpaced advanced economies in using rate hikes to curb inflation, creating a generational gap relative to the Fed’s monetary cycle and entering a rate-cut phase aimed at stimulating economic activity.

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Chile's central bank kept its benchmark rate at 4.5%, citing geopolitical risks driving up oil prices and higher copper costs. The bank subsequently raised its 2026 inflation forecast to 3.6% while lowering economic growth projections.

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Chile's central bank holds benchmark rate as risks rise from Middle East war

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