Chart of the Week - Pause for Thought
Chart of the Week - Pause for Thought
One of the most interesting charts on our radar right now...
Chart of the Week - Central Banks Pause for Thought
Central Bank Pause-o-meter: This chart tracks the proportion of central banks (across developed + emerging markets: 39 central banks, representing ~90% of world GDP) who neither cut nor hiked rates during the month (i.e. left interest rates unchanged).
In April (at just under 90%) it reached the highest level since mid-2021 (which was when the global policy pivot to hiking began). Definitely an interesting indicator, and certainly pause for thought in terms of the phase of the global monetary policy tightening cycle.
At this point the bulk of tightening is most likely behind us as inflation pressures begin to ease-off and recession risks come into focus. But pause is probably the key word for the time being as no one will want to be the central bank that cut rates and saw inflation resurge — as usual they will want to see a clear and unarguable deterioration in the data before thinking about thinking about cutting rates again.
Key point: April saw a surge in central banks “pausing”.
n.b. Check out the full archives of the Chart Of The Week for more charts.
Aside from the Chart Of The Week, this email gives you a brief overview of what was covered in our latest Weekly Insights Report (this email provides a free preview of the Topdown Charts premium service on Substack).
Topics covered in the latest Weekly Insights Report
Aside from the chart above, we looked at a bunch of other charts across some important and interesting macro/asset allocation issues:
Global Policy Pulse: status check on the global monetary policy cycles.
US Housing Market: beware of the dreaded “dead cat bounce“…
China: taking stock of Chinese stocks.
Emerging Markets: 2 simple charts that make the case very clear.
Frontier Markets: an overlooked and undervalued part of the market.
Governance Penalty: how it looks if you adjust global equities for governance.
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Callum Thomas
Head of Research and Founder at Topdown Charts
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