Interest-Rate Hikes Come Thick and Fast, Where do Central Banks Stand in the Race to Contain Inflation?
Major central banks have sped up their fight against inflation, unleashing another 350 basis points of hikes this week.
The biggest movers included Sweden's Riksbank, which surprised with a 100 basis-point hike on Tuesday, while the Federal Reserve increased its benchmark by 75 basis points for a third straight time on Wednesday. British, Swiss and Norwegian central banks all delivered large hikes on Thursday.
Central banks in the 10 big developed economies have raised rates by a combined 1,965 basis points in this cycle to date.
Here's a look at where policymakers stand in the race to contain inflation.
The biggest movers included Sweden's Riksbank, which surprised with a 100 basis-point hike on Tuesday, while the Federal Reserve increased its benchmark by 75 basis points for a third straight time on Wednesday. British, Swiss and Norwegian central banks all delivered large hikes on Thursday.
Central banks in the 10 big developed economies have raised rates by a combined 1,965 basis points in this cycle to date.
Here's a look at where policymakers stand in the race to contain inflation.
1) US
The Fed officials sent a more hawkish signal than previously and showed its policy rate rising to 4.4% by year-end, before peaking at 4.6% in 2023. Rate cuts are not expected until 2024.
The Fed officials sent a more hawkish signal than previously and showed its policy rate rising to 4.4% by year-end, before peaking at 4.6% in 2023. Rate cuts are not expected until 2024.
2) Canada
On Sept. 7, the BoC hiked its policy rate to 3.25%, its highest level in 14 years. Money markets bet the Bank of Canada will raise its policy rate by 50 bps in October to 3.75%.
The BoC will do whatever is needed to bring price increases back to target, a Bank of Canada official said on Tuesday.
On Sept. 7, the BoC hiked its policy rate to 3.25%, its highest level in 14 years. Money markets bet the Bank of Canada will raise its policy rate by 50 bps in October to 3.75%.
The BoC will do whatever is needed to bring price increases back to target, a Bank of Canada official said on Tuesday.
3) New Zealand
The Reserve Bank of New Zealand last month delivered its seventh straight hike - and fourth consecutive rise of 50 bps - to lift rates to 3%, the highest since September 2015.
The RBNZ struck a more hawkish tone and sees rates at 4% by early 2023, versus a previous projection of 3.7%.
The Reserve Bank of New Zealand last month delivered its seventh straight hike - and fourth consecutive rise of 50 bps - to lift rates to 3%, the highest since September 2015.
The RBNZ struck a more hawkish tone and sees rates at 4% by early 2023, versus a previous projection of 3.7%.
4) UK
The Bank of England delivered a second consecutive half-point hike in its battle to bring down inflation. Money markets were on Thursday pricing in a peak in rates at around 4.9% by June 2023.
The Bank of England delivered a second consecutive half-point hike in its battle to bring down inflation. Money markets were on Thursday pricing in a peak in rates at around 4.9% by June 2023.
5) Norway
Norway raised its benchmark rate by 50 basis points to 2.25% on Thursday, but signalled that its tightening may be nearing an end as officials see the economy responding to their action against inflation.
Norway raised its benchmark rate by 50 basis points to 2.25% on Thursday, but signalled that its tightening may be nearing an end as officials see the economy responding to their action against inflation.
6) Australia
The RBA has delivered 225 bps of hikes since May, taking its key rate to a seven-year high of 2.35%.
The RBA has delivered 225 bps of hikes since May, taking its key rate to a seven-year high of 2.35%.
7) Sweden
Sweden raised rates on Tuesday by a larger-than-expected one percentage point to 1.75% and said it would continue to increase borrowing costs to bring inflation back to the target level.
Sweden raised rates on Tuesday by a larger-than-expected one percentage point to 1.75% and said it would continue to increase borrowing costs to bring inflation back to the target level.
8) Euro Zone
The euro zone's central bank hiked rates by a record 0.75% earlier in September, bringing its deposit rate to 0.75% and its main refinancing rate to 1.25%, their highest levels since 2011. Money markets now price in around 70 bps of hikes in both October and December.
The ECB implied rate rises could continue into early 2023 even as the bloc braces for recession.
The euro zone's central bank hiked rates by a record 0.75% earlier in September, bringing its deposit rate to 0.75% and its main refinancing rate to 1.25%, their highest levels since 2011. Money markets now price in around 70 bps of hikes in both October and December.
The ECB implied rate rises could continue into early 2023 even as the bloc braces for recession.
9) Switzerland
The Swiss National Bank raised its policy rate on Thursday by another 75 basis points from minus 0.25% to 0.5% as expected, lifting borrowing costs above zero for the first time in almost eight years.
The bank also raised its inflation forecasts for 2022 and 2023 to 3% and 2.4% respectively, adding it couldn't rule out that further rate hikes will be needed to control inflation.
The Swiss National Bank raised its policy rate on Thursday by another 75 basis points from minus 0.25% to 0.5% as expected, lifting borrowing costs above zero for the first time in almost eight years.
The bank also raised its inflation forecasts for 2022 and 2023 to 3% and 2.4% respectively, adding it couldn't rule out that further rate hikes will be needed to control inflation.
10) Japan
The Bank of Japan stuck with its ultra-low rates and Governor Haruhiko Kuroda said there's little prospect of a near-term rate hike.
The Bank of Japan stuck with its ultra-low rates and Governor Haruhiko Kuroda said there's little prospect of a near-term rate hike.
Source: Reuters, Bloomberg
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meruson : Sweden for the win 100bps. US cannot lose out, 125bps next meeting.