Frankfurt | Washington: The world’s biggest central banks are on the starting line of reversing a record string of interest rate hikes but the way down for borrowing costs will look very different from the way up.
There will be no floodgates or fireworks. Instead, banks on opposite sides of the Atlantic are likely to move in the smallest increments with periodic pauses, fearing that ultra-low unemployment could rekindle inflation rates still above their targets.
The eventual bottom for interest rates is also set to be far higher than the historic lows of the last decade and mega-shifts in the structure of the global economy could put borrowing costs on a higher path for years to come.
Central banks started to jack up rates from late 2021 as post-pandemic supply constraints and surging energy prices on Russia’s war in Ukraine sent inflation into double-digit territory across much of the world.
