Global central banks extend rate hike push in November

  • The G10 central banks proposed a 350 bps rate hike last month
  • Emerging market central banks tightened policy by 400 bps
  • The era of tourism is coming to an end in many developing countries

LONDON, Dec 5 (Reuters) – The pace and scale of central bank rate hikes accelerated again in November as policymakers around the world grapple with decade-high inflation.

The central banks, which control six of the 10 most traded currencies, raised rates between them by 350 basis points (bps) last month.

The US Federal Reserve Bank, Bank of England, Reserve Bank of Australia, Norges Bank of Norway, Riksbank of Sweden and Reserve Bank of New Zealand raised interest rates in November.

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The European Central Bank, the Bank of Canada, the Swiss National Bank and the Bank of Japan did not hold rate-setting meetings in November.

The latest moves bring the total rate increase in 2022 from G10 central banks to 2,400 bps.

“Interest rates will continue to rise looking ahead to 2023,” said Aleksandra Dimitrijevic at S&P Global Ratings.

Interest rates in developed markets

Global financial markets have been in turmoil in recent weeks as investors try to gauge how much the US Federal Reserve and other central banks will raise rates to combat inflationary pressures amid fears of a slowdown in global growth. to spread

Some fresh signs of lower inflation in the United States have cheered markets in recent days, and Fed officials are scheduled to meet on December 13 and 14.

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Fed Chairman Jerome Powell said on Wednesday that the US central bank could reduce its pace of rate hikes “in December”.

Data from emerging market central banks showed a similar pattern. Eight of the 18 central banks raised rates by just 400 bps in November – up from 325 bps in October, but down from the 800 bps in June and July.

Emerging market interest rates

Indonesia, South Korea, Mexico, Thailand, Malaysia, the Philippines, Israel and South Africa all raised rates in November, signaling a shift in policy towards Asia and away from Latin America and emerging Europe, where the period ends.

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“With the exception of a few countries, we are past the peak of the rate hike,” said Nafiz Zouk at Aviva Investors.

Outside Turkey, where President Tayyip Erdogan is pushing to lower interest rates, cut another 150 bps to lower rates to single digits despite inflation hovering above 80 percent.

Not all emerging market central banks in the sample held rate-setting meetings last month.

Estimates show that emerging market central banks raised interest rates by a total of 7,165 bps, more than double the 2,745 bps for all of 2021.

Reporting by Karin Strohecker and Vincent Flasser in London Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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