The cycle of global monetary easing continued in October, with central banks across advanced and developing economies cutting interest rates ahead of the US election.
Three of the four central banks that control the 10 most traded currencies and held meetings in October cut benchmark rates. Central banks in New Zealand and Canada each cut their interest rates by 50 basis points, while the European Central Bank cut by 25 basis points.
Japan kept rates unchanged, while the US Federal Reserve and central banks in Australia, Switzerland, Norway and the UK held no rate-setting meetings.
The focus now shifts to how far and how long the cycle of rate cuts in developed markets will last.
The outcome of the US election could play a key role in shaping US and global monetary policy going forward, with the Fed expected to cut rates by 25 basis points on Thursday.
Democratic challenger Kamala Harris is widely seen as maintaining the status quo on growth and inflation in the world's largest economy. Republican candidate Donald Trump has promised to raise trade tariffs, which could spark a trade war that would stoke inflation and limit potential rate cuts.
In developing markets, 13 of the 18 central banks in a Reuters poll of developing economies held rate-setting meetings in October. Six of them implemented cuts, with China, South Korea, Thailand, the Philippines and Chile each cutting benchmark rates by 25 basis points and Colombia cutting by 50 basis points. Russia was the only central bank in emerging markets to raise rates, raising rates by 200 basis points, while the other six kept rates unchanged.
Developing market central banks have been ahead of their developed market counterparts in the latest cycle of rate cuts. Recent easing by developing country policymakers has supported emerging market bonds this year, analysts said.
"We think these rate cuts are likely to be stopped shortly," said Jean Boivin, head of the BlackRock Investment Institute in a note to clients.
The latest move in developing country markets brings the total cut since the start of the year to 1,710 basis points, exceeding last year's total easing of 945 basis points.
