Interest charge

The Fed is leading the charge against global inflation. Here’s what 9 other central banks have done this week to join the fight.

  • The Federal Reserve’s 75 basis point rate hike was just one of many central bank moves this week.
  • The Bank of Japan kept its benchmark rate unchanged, while others raised interest rates.

The Federal Reserve raised interest rates by 0.75 points on Wednesday, although a host of other central banks also planned policy adjustments this week.

The Fed’s latest move was the third rate hike of this magnitude this year as authorities scrambled to rein in inflation. Fed Chairman Jerome Powell has signaled that more interest rate hikes are likely.

Last week, the World Bank said policymakers were “raising interest rates this year with a degree of synchronicity not seen in the past five decades.”

Global inflation has soared through 2022, in part due to Russia’s war on Ukraine, Europe’s lingering energy crisis and what many commentators see as belated policy reactions in response to historic inflation.

Traders in the United States, meanwhile, expect a further 125 basis point rate hike over the next two Fed meetings.

Here’s a look at what’s happening at nine central banks around the world.

  • Japan: The Bank of Japan kept interest rates low by holding its benchmark measure at minus 0.1%, taking a different path than other banks around the world and avoiding aggressive policy.
  • UK: The Bank of England hiked 50 basis points to 2.25% and is expected to start selling bonds.
  • Norway: Its bank raised rates by 50 basis points, equaling the UK’s 2.25%.
  • Swiss: Increase in rates by 75 basis points to 0.5%.
  • Indonesia: Raised its benchmark rate by 50 basis points to 4.25%.
  • Turkey: reduced its reference rate from 13% to 12%.
  • Taiwan: The central bank of this East Asian country increased its discount rate by 0.125 points to 1.625%.
  • The Philippines: It raised its benchmark overnight borrowing rate by 50 basis points to 4.25%.
  • South Africa: Increase in the key repurchase rate by 75 basis points, to 6.25%.

Turkey’s decision came as a shock, given that inflation in August exceeded 80%. The lira fell to a record low against the dollar.

The United States, for its part, will not be able to manage the Fed’s plan to raise rates above 4%, according to JPMorgan’s chief strategy officer David Kelly, adding that belated warmongering from the Fed will likely tip the economy into a recession.

“This economy has one foot in the grave,” Kelly told CNBC on Wednesday. “It really looks like it might be pushed into recession, and I just don’t see why. If inflation is coming down slowly, let it come down slowly.”