Central bank sticks to rate hikes as it looks to market turmoil

LONDON: The world’s central banks have juggled the need to curb inflation through interest rate hikes and calm markets reeling from turmoil in the banking sector that has revived memories of the global financial crisis of 2008. I have to.

Central banks in Switzerland, Norway and the UK all hiked rates on Thursday after the Federal Reserve hiked rates by 25 basis points moderately on Wednesday.

Overall, the 10 advanced economies have hiked rates by a combined 3,290 basis points (bp) this cycle so far.

Japan is a holdout pigeon.

From hawks to doves, let’s take a look at the positions of policymakers.

(Image: Rate hike race – https://www.reuters.com/graphics/GLOBAL-MARKETS/lbvggjjagvq/chart.png)

1) USA

The Fed hiked rates by a quarter of a percentage point on Wednesday, continuing its most aggressive series of rate hikes since the 1980s. It also calmed a market that had been roiled by the collapses of US lenders Silicon Valley Bank and Signature Bank and UBS’s takeover of rival Credit Suisse.

After setting the policy rate at 4.75-5.00%, the Fed hinted that it may soon pause rate hikes.

Chairman Jerome Powell said there were “no weaknesses pervasive throughout the banking system.”

(Image: Federal Reserve Raises Small Interest Rates – https://www.reuters.com/graphics/GLOBAL-MARKETS/zgpobajllvd/chart.png)

2) New Zealand

The Reserve Bank of New Zealand (RBNZ) eased its pace of tightening, raising interest rates by 50 bps, reaching a 14-year high of 4.75% in February.

Meeting minutes showed officials were considering a 75 basis point rate hike. The RBNZ also said it was too early to assess the policy implications of January’s severe floods, leaving his forecast for peak interest rates unchanged at 5.5%.

(Graphic: New Zealand Rate Hike – https://www.reuters.com/graphics/NEWZEALAND-ECONOMY/dwvkdkdggpm/chart.png)

3) Canada

On March 8, the Bank of Canada became the first major central bank to stop tightening monetary policy in this cycle.

We kept the key overnight rate at 4.50%, with the aim of holding inflation down to 3% around mid-year.

(Image: Bank of Canada Holds Key Rates – https://www.reuters.com/graphics/CANADA-CENBANK/akveqeqzjvr/chart.png)

4) United Kingdom

The Bank of England hiked rates by another 25 bps on Thursday and said it expects the UK’s inflation spike to cool faster than before despite an unexpected spike announced Wednesday. .

Noting that the banking turmoil has caused a “large and volatile move” in global financial markets, he said the Monetary Policy Committee had judged the UK’s banking system to remain resilient.

(Graphic: BoE’s inflation struggle continues – https://www.reuters.com/graphics/BRITAIN-BOE/mopakwyzqpa/chart.png)

5) Australia

Australia’s central bank raised its key rate by a quarter of a percentage point to 3.6% in March, the highest since May 2012.

Governor Philip Lowe said monetary policy was “in a restrictive area” and said the bank’s board was ready to respond if data supported a moratorium.

(Graphic: Keep inflation under control – https://www.reuters.com/graphics/GLOBAL-MARKETS/THEMES/lbpgglyzypq/chart.png)

6) Norway

Norway’s central bank raised interest rates by 25 basis points to 3% on Thursday, signaling further rate hikes.

The Bank of Norway has revised up its rate forecast, saying it is likely to raise rates again in May and then reach 3.5% by the summer.

(Image: Norwegian Rate Hike – https://www.reuters.com/graphics/GLOBAL-CENTRALBANKS/movakwydyva/chart.png)

7) Eurozone

The ECB raised the deposit rate by another 50 basis points to 3% on March 16th.

Interest rates peak at around 3.5% despite concerns for the eurozone economy stemming from tightening credit conditions as lenders may become more cautious due to troubles between Credit Suisse and US banks, investors said. is seen to reach

Bundesbank Governor Joachim Nagel, a leading hawk on the European Central Bank’s Governing Council, said he was “bold and determined” and that “inflation must be contained”.

(Graphic: ECB Sticks to Big Hike ECB Sticks to Big Hike – https://www.reuters.com/graphics/GLOBAL-CENTRALBANKS/gdvzqkyzbpw/chart.png)

8) Sweden

Riksbank raised interest rates by 50bps to 3% in February, signaling further tightening. The next decision is April 26th.

Inflation was very high in February, with the underlying rate jumping to 9.3%, the fastest pace since July 1991, removing volatile energy prices.

(Graphic: Further Riksbank rate hikes expected amid record inflation – https://www.reuters.com/graphics/GLOBAL-CENTRALBANKS/xmvjkbkogpr/chart.png)

9) Switzerland

The Swiss National Bank on Thursday raised its key interest rate by 50 basis points to 1.5% and said UBS’s emergency takeover of Credit Suisse “has stopped the crisis”.

Inflation stood at 3.4% in February, well above the SNB’s target band of 0% to 2%, and the central bank continues its fourth straight rise despite the bank turmoil.

The SNB also indicated that the possibility of another rate hike cannot be ruled out.

(Image: Swiss National Bank hikes rates – https://www.reuters.com/graphics/CEN-WRAP/klpygqmjkpg/chart.png)

10) Japan

The Bank of Japan, the most dovish major central bank, kept interest rates ultra-low at its March meeting, the final meeting of Bank of Japan Governor Haruhiko Kuroda.

The Bank of Japan has resisted changing the yield curve control policy it uses to cap interest rates on long-term debt. Investors expect Kuroda’s successor, Kazuo Ueda, to phase out the program, possibly later this year, as inflation remains above the BOJ’s target of 2%.

(Image: Bank of Japan attack – https://www.reuters.com/graphics/JAPAN-ECONOMY/BOJ/byvrlmxeyve/chart.png)