Central banks had a somewhat active October.

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The view that global economies are gradually approaching the end of their battle against inflation, which has been ongoing for about three years, is gaining confidence, as the vast majority of central banks continue to adjust their policies according to the economic developments in their countries.

In October, the European Central Bank (ECB), the Bank of Canada (BoC), and the Bank of Korea lowered interest rates, while the Central Bank of Russia decided to raise interest rates.

The Bank of Japan (BoJ), the People's Bank of China (PBoC), the Reserve Bank of India (CBI), the Hungarian National Bank (MNB), and the Central Bank of the Republic of Turkey (TCMB) kept their policy rates unchanged.

ECB MADE THE THIRD INTEREST RATE CUT OF THE YEAR

In line with market expectations, the ECB made the third interest rate cut of the year, reducing the three key policy rates by 25 basis points.

In the bank's statement regarding monetary policy, it was noted that the deposit interest rate was lowered from 3.50% to 3.25%, and the refinancing rate and marginal lending rate were also reduced by 25 basis points to 3.40% and 3.65%, respectively. Thus, in the 7th meeting of the year regarding monetary policy, both the refinancing rate and the marginal funding rate saw their third cut since March 2016, while the deposit rate was cut for the third time since September 2019. ECB President Christine Lagarde stated after the meeting that economic activities in the Eurozone were slightly weaker than expected, saying, "Recent data indicate stagnant growth. Companies are only slowly expanding their investments, while investments in housing continue to decline."

BOC AND BANK OF KOREA LOWERED POLICY RATE

The BoC, in its fourth consecutive meeting, eased its policy by reducing the policy rate by 50 basis points to 3.75%.

In a statement from the BoC, it was mentioned that inflationary pressures are no longer broad-based, and expectations for inflation among businesses and consumers have largely normalized, noting that inflation is expected to remain close to the target, with upward and downward pressures on inflation roughly balanced.

The Bank of Korea also lowered its policy rate by 25 basis points to 3.25%, in line with expectations. This cut was the first interest rate reduction since 2020.

The bank stated that inflation shows a clear trend of stability, and it was noted that household debt growth has slowed and risks in the foreign exchange market have somewhat decreased.

The Reserve Bank of New Zealand also made its second interest rate cut of the year, reducing the policy rate from 5.25% to 4.75% by 50 basis points.

TCMB KEPT POLICY RATE UNCHANGED

The TCMB Monetary Policy Committee (PPK) kept the one-week repo auction rate, which is the policy rate, unchanged at 50% in October.

In a statement from the bank, it was expressed that the main trend of inflation rose somewhat in September, and "Indicators for the third quarter imply that domestic demand continues to slow, approaching levels that support a decline in inflation. While core goods inflation remains low, an improvement in service inflation is expected to occur in the last quarter." was included in the assessment.

JAPAN DID NOT CHANGE POLICY RATE

The BoJ unanimously decided to keep the short-term interest rate at 0.25%.

Following the decision, the bank published the "Outlook Report on Economic Activity and Prices" for October 2024.

The report indicated that Japan's economy is likely to continue growing at a rate above its potential growth rate, with the annual increase in the core Consumer Price Index (CPI) expected to be around 2.5% in the fiscal year 2024, and approximately 2% in the fiscal years 2025 and 2026.

CHINA SKIPPED OCTOBER

In China, the PBoC kept the one-year lending rate, which is the main policy rate, unchanged, while the National Interbank Funding Center lowered the one-year loan interest rate from 3.35% to 3.1% and the five-year loan interest rate from 3.85% to 3.6%.

Analysts commented that the central bank's decision to keep the policy rate unchanged is a sign of its cautious stance in monetary policy despite gradual recovery steps.

Meanwhile, the Hungarian National Bank, the Polish National Bank, and the Reserve Bank of India kept their policy rates unchanged at 6.50%, 5.75%, and 6.50%, respectively.

RUSSIAN CENTRAL BANK DECIDED TO RAISE INTEREST RATES

The Central Bank of Russia raised its policy rate by 200 basis points to 21%, reaching the highest level ever.

In a statement from the bank, it was noted that "the current inflation expectations for the country’s economy continue to rise," and "The growth of domestic demand significantly outpaces the possibilities for expanding the supply of goods and services."

The statement indicated that the annual inflation rate in September was 9.8%, exceeding expectations, and noted that there is a possibility of further interest rate hikes in upcoming meetings.

The bank last raised the policy rate on September 13 by 100 basis points to 19%.