On Thursday, the Bank of England said it would pause its longest cycle of interest rate hikes in more than a century, keeping benchmark borrowing costs in the United Kingdom at a 15-year high of 5.25%.- CNN Reports.

The announcement came just hours after Switzerland’s central bank kept rates unchanged and a day after the US Federal Reserve did the same, holding its key lending rate in the range of 5.25% to 5.5%.

“Central banks think they have raised interest rates enough to bring inflation down to their 2% targets in a couple of years’ time,” Paul Dales, chief UK economist at Capital Economics, told CNN. Policymakers are hoping they can bring down inflation without tipping their respective economies into recession, he added.

The European Central Bank (ECB), which sets monetary policy for the 20 countries using the euro currency, hiked rates by a quarter of a percentage point to 4% last week, but intimated that it had finished its cycle of rate rises.

Key interest rates are now at levels that, if “maintained for a sufficiently long duration, will make a substantial contribution” to reducing inflation to its 2% target, the central bank said.

The Fed has jacked up rates 11 times since March last year, while the Bank of England has delivered 14 consecutive rises after inflation started to gather speed from the end of 2021.

Now, data is starting to suggest that the world’s major economies have finally turned a corner on price rises.

Annual inflation in the United States, the UK and the European Union has tumbled from multi-decade peaks hit last year, though it is still well above the 2% targeted by their central banks. Importantly, core inflation — which strips out volatile food and energy costs and is seen as a better indicator of underlying price pressures — is declining in all three regions.

And, amid the pain unleashed by high inflation, sometimes bad news is good news: Across the UK and the EU, anemic economies signal that inflation could fall further, making further rate rises unnecessary.

Earlier this month, the European Commission downgraded its economic forecasts for this year and next, citing still-high inflation and rises in borrowing costs. It now expects the EU economy to grow 0.8% in 2023, down from a 1% increase forecast in the spring.

Output in Germany stayed flat in the second quarter, signaling that Europe’s biggest economy is struggling to bounce back from a winter recession, when its gross domestic product contracted over two consecutive quarters.

In the UK, GDP shrank 0.5% in July after increasing slightly in the second quarter, unemployment has ticked up, and the number of job openings has dipped below 1 million for the first time in two years.

Despite progress on taming inflation, central banks have warned that their fight may have to go to a final round, and that even if another hike isn’t needed, rates will need to remain high well into next year.

Oil prices have climbed in recent weeks, driven by production cuts from oil-exporting nations Saudi Arabia and Russia, as well as a slight improvement in Chinese economic data, which could herald stronger demand. Brent crude, the global oil benchmark, reached its highest level in 11 months Friday, hitting $94 a barrel.

The rally could translate into another spike in inflation.

“There is absolutely no room for complacency,” Bank of England Governor Andrew Bailey said in a video posted to the bank’s website Thursday. “We’ll be watching closely to see if further [rate] increases are needed. And we will need to keep interest rates high enough for long enough to ensure that we get the job done.”

In the US, where the economy continues to post robust growth, “there will be very minimal space for policy easing next year,” Seema Shah, chief global strategist at Principal Asset Management, wrote in a note Wednesday.

The Fed’s latest economic projections have “certainly rammed home the message of ‘higher for longer’ and reflects the continued wariness and fear of an inflation resurgence if it takes the foot off the brake too soon and too quickly,” she said.

So-called dot-plot projections show that most Fed officials expect the key US lending rate to top out at a range between 5.63 and 5.87% this year — suggesting that another hike could be on the way. Officials now also expect fewer rate cuts in 2024.

Economists are more convinced the ECB has completed its rate hiking campaign.

“The ECB delivered what will likely be a final hike in the cycle and has now entered a ‘higher for longer’ phase,” J.P. Morgan analysts wrote in a note Friday.

In any case, Jennifer McKeown, chief global economist at Capital Economics, thinks recent developments mark a “tipping point” for monetary policy around the world.

“We believe that the global monetary policy tightening cycle is drawing to a close,” she said in a note Thursday. “By this time next year, we anticipate that 21 out of the world’s 30 major central banks will be cutting interest rates.”