The global monetary easing cycle is beginning to lose momentum. Central banks are still cutting interest rates more often than raising them: since the start of 2026, policymakers worldwide have delivered 31 rate cuts compared with 12 increases. Yet the gap between the two is narrowing rapidly, suggesting that the global economy is edging toward a new phase of the interest-rate cycle.
Over the past three months, rate cuts outnumbered hikes by only about three decisions. That is the smallest margin since 2023. The shift is even more pronounced in advanced economies, where the trend has effectively reversed. During the same period, central banks in developed markets raised rates three more times than they cut them. Emerging markets continue to lean toward easing, but even there the advantage of rate cuts has shrunk to just six decisions.
The contrast with recent years is striking. At the height of the inflation shock in 2022, central banks delivered nearly 90 more rate hikes than cuts within a single three-month period. The world remains far from that scale of tightening, but the direction of travel now looks very different from what it did just a year ago.
The main reason is persistent inflation pressure. Price growth has slowed across many economies, but not as quickly as policymakers and financial markets had anticipated. As a result, the room for further rate cuts is gradually diminishing, while the prospect of additional tightening no longer looks like a purely theoretical risk.
For the past two years, financial markets have largely been positioned around the expectation that cheap money would return. Increasingly, however, evidence points to a less comfortable next chapter. Interest rates may decline more slowly than investors expect, and some central banks could find themselves considering renewed tightening.
The global rate-cutting cycle is not over yet, but its momentum is clearly fading. For currency markets, borrowers, and investors, that means a return to a world where the price of money once again becomes one of the most important constraints on economic decision-making.
This article was translated with the assistance of artificial intelligence.
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