The World Is Awash in Easy Money
The Federal Reserve isn’t the only central bank cutting interest rates. In fact, the world is awash in easy money.
The Fed met market expectations during the September FOMC meeting and lowered interest rates another 25 basis points. It was the second cut of the year and pushed the interest rate down to the range of 1.75–2%. Meanwhile, the European Central Bank took a decidedly dovish turn over the summer. It has even hinted at another round of “shock and awe” stimulus.
And it’s not just the big central banks slashing rates.
Eleven emerging market central banks cut rates in September. That follows on the heels of 14 rate cuts by emerging market central banks in August. September was the eighth straight month of net cuts by emerging market bankers. according to a Reuters report.
Emerging markets went through a tightening cycle that ended in early 2019, following the lead of the Fed’s “Powell Pause.” Emerging market tightening lasted a mere nine months.
In effect, we’re seeing a race to the bottom in interest rates around the world.