Central banks in major countries around the world, including the U.S. Federal Reserve (Fed), are competing to raise interest rates to curb inflation. On June 15, the Fed took the “Giant Step” to raise the benchmark interest rate by 0.75 percentage points (p) at once. It is the first time since 1994 that interest rates have been raised by 0.75 percent at once. At the Federal Open Market Committee (FOMC) meeting to be held at the end of this month, a 0.75%p to 1%p increase is expected
According to the British Financial Times (FT) on the 17th (local time), central banks in 55 countries around the world raised interest rates by at least 0.5%p over 62 times in the three months from April to June. In addition, during July, central banks in each country have already raised interest rates by more than 0.5%p 17 times. FT pointed out that it is the first time in 100 years that central banks of each country have continuously raised interest rates by such a large margin.
Central banks in other major countries are busy chasing the Fed as it raises interest rate hikes to their highest level. As U.S. interest rates rise, the dollar’s value against major currencies is super strong, and other countries are under stronger inflationary pressure from falling local currency values.
The Bank of Korea also raised interest rates by 0.5%p on the 13th, and Canada raised interest rates by 1%p on the 13th. Chile and the Philippines also raised interest rates by 0.75 percentage points on the 14th. On the 2nd, New Zealand’s central bank raised interest rates by 0.5%. On the 12th, the Hungarian central bank raised its key interest rate by 2.00%p. Hungary raised interest rates by 3.85 percent in just two months. In June, Australia, Norway, and Switzerland raised interest rates by 0.5%p.
“Now, 0.5%p is acting like a new 0.25%p in the market,” said Jane Foley, a senior foreign exchange manager at Labo Bank. “So far, the central bank has set the increase at 0.25%p when it normally raises interest rates, but now it considers 0.5%p as the basic increase.”