Robin Brooks posted a nice chart showing what's priced in for global central banks at the end of 2024. Now, markets are not much better at forecasting far-out events than the Fed but the pricing underscores the differences.
The 2024 median for the Fed is 4.00-4.25% but the market is pricing in 3.2%. It's a similar story elsewhere with the market confidently predicting that inflation will fall faster than central banks expect.
1. New Zealand (grey): 4.8%
2. UK (dark blue): 3.9%
3. Australia (yellow): 3.6%
4. USA (black): 3.2%
5. Canada (green): 2.9%
6. Sweden (pink): 2.9%
7. Euro zone (light blue): 2.8%
8. Switzerland (red): 1.2%
9. Japan (purple): 0.2%
Notable is how quickly the market expects some central banks to backtrack while suggesting the RBNZ and BOE will have more resolve. That should be a tailwind for GBP and NZD at some point, though I suspect it will require some patience.
