Central Banks Near End of Rate-Hike Cycle: Kiplinger Economic Forecasts

White puzzle pieces are the backdrop for a red line and successively taller red columns indicating rising interest rates.

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Further interest rate hikes are likely in most advanced economies this year. But most major central banks are near the end of their rate-hike cycles. 

The European Central Bank is leaning toward another quarter-point increase in September, but it’s possible that slowing economic activity in the eurozone might prompt the ECB to pause at its next meeting. The Bank of England will likely raise rates again in September, after raising them in August. The Bank of Canada looks set to repeat its quarter-point hike in July at its next meeting in September unless core inflation slows soon. Central banks in advanced economies will likely not start reducing interest rates until well into 2024.

Most Latin American countries will start to cut interest rates this year. In fact, some already are. Having been among the first central banks in the world to raise interest rates in 2021, Brazil and Chile have started to cut interest rates, and will likely continue to do so in coming months. Ditto for Peru and Colombia. Mexico’s central bank will likely be the last in the region to embark on rate cuts, as core inflation remains stubbornly high there and the labor market stays tight.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.