Search Here

Central banks from all over the world are on standby as interest rate moves are expected this week.

Besides the two-day meeting by Feds Chairman Jerome Powell, other country's reserve banks will also hold their policy meeting, namely; the Bank of England, Bank of Japan, Brazil's Central Bank, Norway's Norges Bank and South Africa's Reserve Bank.

However, CNBC clarified that the US central bank is joining others and not the other countries awaiting their rate cuts. Now, the only concern is just how much rate will be cut by the Feds in different countries.

Rate Cuts from Central Banks

VCPost shared that a 59% basis point or half-point is expected for US Feds. According to CNBC, with this point, they are possibly looking at between 5.5% and 5.9% interest rate cuts.

As for other countries expected to finish their policy meeting this week, Euronews stated that Brazil will possibly raise the selic rate by 25 basis point of 10.75% rate cut in Septmber, which could increase to 11.50% depending on economic data. Bank of England will keep it steady at 5% and Norges Bank will maintain the 4.5% cut from August.

South Africa's Reserve Bank has no figures yet, but its interest rate cut will be its first reduction since the COVID-19 pandemic. Although meetings were set, the Bank of Japan will not be joining the others in raising interest rate cuts this week and will be moving at the end of the year instead.

How Rate Cuts will Impact Your Loans and Savings

A country's economic growth is dependent on multiple factors, and it includes you. CNBC detailed that decreasing interest rates also decreases the cost of borrowing. So if you have ongoing loans, your monthly payments are reduced. But if you're planning to apply for a new loan, an interest rate cut is highly beneficial because it lowers all the interest you will have to pay. However, keep in mind that rates vary from each bank, some are fixed so the impact is not direct.

While this seems like a beneficial move, investors who worry about the rates have valid reasons. In the same report, CNBC shared that it also decreases the returns on your savings accounts and other investments that have interests, which means lower earnings for those relying on interest income. Fortunately, the Feds give everyone a fair headstart, so you can adjust your finances accordingly once the lowered interest rate cuts are implemented.

Tags

Federal Reserve, Interest rates, Bank of England, Bank of Japan