Rate Cycles (Where Are We Now?)

I’ve been remiss in reporting on this important work by Kristin Forbes, Jongrim Ha and Ayhan Kose, documenting periods of monetary policy tightening ad loosening, and characteristics of those episodes. From the paper:

Source: Forbes, Ha and Kose (ungated version, 2024).

The methodology of identifying the cycles will look familiar to those familiar with business cycle dating. The chronology is here:

Source: Forbes, Ha and Kose (ungated version, 2024).

From the abstract:

Table 1 presents a plethora of stylized facts about such rate cycles and synchronization with other rates.

Source: Forbes, Ha and Kose (ungated version, 2024).

Back to the question of where are we now? CFR’s Monetary Policy Tracker gives a hint on the diffusion of tightening/loosening:

However, in terms of peak vs. trough for major central banks, this picture might be of more use:

Source: Fidelity via Timmer.

That is, it’s too early to say…