The big monetary policy news of the evening: Brazil’s central bank has cut interest rates from 9.75% to 9.00%. That was somewhat expected, but the real news according to Reuters is the dovish tone taken by the bank, implying more rate cuts to come.Let’s take a moment to pause and reflect on the state of global monetary policy.
The other big rate cutter is India, which did a 50 basis point cut earlier this week.
China is generally in an easing mood, though it’s been a while since there’s been a reserve requirement ratio cut.
So that’s 3 of the 4 BRIC nations in easing mode.
On the other hand, today the Sweden’s Riskbank held rates steady, surprising some. Then there was the Bank of England, which suddenly took a hawkish tone. And recent comments from the Bank of Canada was also hawkish. Also, the release of the March minutes from the Fed was hawkish, and of course the ECB seems to be in paralysis.
So the world’s been turned upside down. The developing countries are casting aside inflation concerns to pump the gas pedal to revive flagging economies, while the world’s ageing developed nations are being relatively tightfisted, letting unemployment stay too high over fears of inflation.
2012 is a strange time.