The most highly anticipated four days of central bank rate hikes – nicknamed “The Rate Hike Extravaganza” is finally here – as the U.S Federal Reserve and a huge number of its global counterparts launch a co-ordinated rapid-fire attack on inflation across the week.
It’s definitely becoming more evident, day by day, that Central banks across the world are fighting a losing battle against rapidly surging inflation and now find themselves in a high-stakes race – frantically trying to raise rates too fast, too late.
If anyone expected inflation to peak in the summer, the vast array of inflation data coming out of nearly every major economy in the world in recent weeks has certainty dashed any hope that price pressures had peaked.
Desperate times call for desperate measures and times are, arguably, increasingly desperate. The persistence of sky-high inflation ripping through almost every major economy has increased odds that policy makers may have no other option, but to resort to their biggest and boldest rate hike measures ever in history.
So far this year, over 60 major central banks from across the world have come together in a co-ordinated global effort to roll out their most their most aggressive monetary tightening cycle since the early 1980s.
And so far, those efforts have hardly made a dent on inflation.
All of this points to one conclusion: the U.S Federal Reserve and its global counterparts now have a very valid and justified reason for taking even bigger steps to combat the highest and most stubborn inflation seen in decades.
Four days of central-bank rate hikes from Tuesday through to Friday are expected to deliver an historic tally of interest-rate hikes totalling more than “500 basis-points combined” – with the potential for an even bigger tally, if policymakers opt for more aggression.
Starting the onslaught will be the Swedish Central Bank on Tuesday, with policy makers anticipated to deliver a “super-sized” 75 basis-point hike.
But that’s just the warm up act to the main event on Wednesday, when the Federal Reserve is expected to announce a mammoth 100 basis-point hike – the biggest increase in U.S interest rates in more than 40 years.
Thursday through to Friday will see the most widespread rate hike action – headlined by the Bank of England.
With Goldman Sachs predicting UK inflation to hit 23% next year – expectations are running high that the Bank of England could also be on the cusp of raising interest rates by a whopping 100 basis-points at one of their next three meeting.
And potentially that could be as early this week!
Elsewhere in a busy week for monetary policy – other central banks from Brazil, Egypt, South Africa, Switzerland, Turkey, Taiwan, Philippines, Indonesia, UAE and The People’s Bank of China are all expected to follow suit with their own aggressive rate hike moves, in a mad dash attempt not to get left behind the rest of their peers.
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