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Central banks hike rates again as Fed pushes global inflation fight

Francisco Canepa

FRANKFURT (Reuters) – Following the US Federal Reserve’s global fight against inflation, many central Banks raised interest rates again on Thursday. Send shockwaves to financial markets and the economy.

Japan, an outlier among major advanced economies, left interest rates unchanged on Thursday but was punished as traders pushed the yen to record lows against the dollar – prompting Japanese authorities to 1998 intervened to support the currency for the first time since.

The Federal Reserve set interest rates at zero on Wednesday. 75% rate hike, the fifth since March, followed by six central banks from Indonesia to Norway, with similar or identical increases within hours Larger rate hikes, usually with guidance for more action.

They are battling inflation ranging from 3.5% in Switzerland to nearly 10% in the UK – the result of a rebound in demand since After the pandemic subsided, supply was weak, especially from China, and fuel and other commodity prices rose after Russia’s invasion of Ukraine. The main task for now, but they are preparing for action to have an impact on the economy, as rising borrowing costs typically dampen investment, hiring and consumption.

“We have to get rid of inflation,” after Fed policymakers unanimously raised the central bank’s benchmark overnight rate to 3.00%- 3. After

, Fed Chairman Jerome Powell told reporters. %. “I wish there was a painless way to do this. No.”

The Fed said it expects the economy to crawl slowly and unemployment to rise to levels historically associated with recessions. Recession – The outlook for the Eurozone is also growing, seen in the UK as very likely.

The Bank of England raised interest rates and said it would continue to “respond strongly to inflation if necessary” despite the economy entering a recession.

“For borrowers again, this will mean a significant increase in costs, but still can’t really control the skyrocketing cost of living,” said Associate Director Emma-Lou Montgomery Fidelity International.

World stocks fell to near two-year lows and emerging market currencies tumbled as investors braced for a world where growth is scarce and credit harder to come by. [MKTS/GLOB]

Market participants have also pushed up interest rate expectations for the ECB, almost certain to raise rates again in October 23 . Now see its own interest rate from 0.80% now to close to 3% next year.

Japan has opted to keep interest rates near zero to support the country’s fragile economic recovery, but many analysts see its stance increasingly tenuous given the global shift to higher borrowing costs Stop.

“There is absolutely no change in our stance of maintaining loose monetary policy for the time being. We will not raise interest rates for a while,” Bank of Japan Governor Haruhiko Kuroda said after the policy was introduced.

But the yen plummeted against the dollar following the decision, forcing Japanese authorities to step in and buy their own currency to stem the slide.

Meanwhile, Turkey’s central bank continued its unorthodox policies on Thursday, with yet another surprise rate cut despite inflation exceeding 80%, pushing the lira up to A record low against the U.S. dollar.

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