EFG International : The Geography of the Global Interest Rate Cycle

The chart shows that the median policy rate has evolved in different ways across these five groups of central banks.

For instance, Latin America has had the highest median policy rate since 2020, and rates started to rise there from March 2021 onwards. The Central Bank of Brazil increased rates from 2% to 2.75% in that month; Mexico followed in June (raising rates from 4% to 4.25%); Chile in July (from 0.5% to 0.75%); and Peru in August (from 0.25% to 0.5%). Interest rates have also risen, but by less, in the group of Eastern European countries. While the median rate increased for the first time in July 2021, the Central Bank of Russia started to raise rates in March (from 4.25% to 4.5%). In June the Czech central bank raised rates from 0.25% to 0.5% and the Central Bank of Hungary from 0.6% to 0.9%, as did the central banks of Poland (from 0.1% to 0.5%) and Romania (1.25% to 1.5%) in October.

The median interest rate has not risen in the Asian or in the Western European groups of central banks. However, the Bank of Korea started raising interest rates in August (from 0.5% to 0.75%), the Central Bank of Iceland raised rates (from 0.75% to 1% in May) and the Bank of Norway followed in September (from 0% to 0.25%).

The median interest rate rose in the group of English-speaking central banks in December 2021 when the Bank of England raised rates (from 0.1% to 0.25%). However, the Reserve Bank of New Zealand had raised rates as early as October 2021 (from 0.25% to 0.5%). While there is much focus on whether the Fed will start a process of interest rate increases at its policy meetings in March, the global interest rate cycle has already turned in Latin America and Eastern Europe, and just started among the central banks in English-speaking countries. Only in Asia and Western Europe is there little sign that rates are on their way up.

¹ See http://go.pardot.com/e/931253/atistics-cbpol-htm-m-6-382-679/fd7c/30518362?h=9v9HI5TPXE5KaB2vB0joXIUQo9u9c3_xKk7LJtZvXNk which also contains information about the exact policy rates used.