Global Economy

Switzerland blinked first. In March, the Swiss National Bank kick-started a rate cutting cycle, becoming the first central bank overseeing the world’s 10 most heavily traded currencies to lower rates for the first time since November 2020. It joined counterparts in Latin America and other emerging markets that have been speeding up rate cuts as the threat of inflation has eased. In February, the Bank of China cut its five-year loan prime rate – the largest cut of its kind on record – to come to the aid of real estate developers struggling with debts. But it was the Swiss cut that got analysts excited.

Revolutions are, by their nature, awfully hard to predict. Our semiannual Country Credit survey reflects the heightened uncertainty.

Sovereign creditworthiness improved slightly in the past six months, driven mainly by a rebound in ratings for the U.S. and much of Europe, but countries in the Middle East and North Africa are seeing their ratings plummet because of the unrest spawned by the political uprisings in Tunisia and Egypt.