Despite the turbulence in the financial sector, other central banks after the Fed in the USA have further tightened their monetary policy in the fight against high inflation. The Bank of England raised interest rates by 0.25 percentage points to 4.25 percent, as announced in London. It is the eleventh interest rate hike since the end of 2021, when the interest rate was just above the zero line. It’s now at a 15-year high. Interest rates were last higher during the financial crisis in 2008. However, the Bank of England left the future course largely open and announced a comprehensive assessment of the economic situation for May.
On Wednesday, the Fed, whose line is followed by many other central banks, set the route. The central bank of the world’s largest economy increased its key interest rate by 0.25 percentage points – it is now in a range of 4.75 to 5.0 percent. The decision had been eagerly awaited on the markets following the collapse of several US banks in recent weeks. It is the ninth rate hike in a row. With this step, the Fed is continuing its fight against the increase in consumer prices, but is refraining from a more aggressive interest rate policy in order not to unsettle the markets too much due to the unrest in the banking sector.
US Federal Reserve Chairman Jerome Powell made it clear that the Fed would raise interest rates further if necessary. At the same time, it is expected that the recent bank failures could slow down demand and thus have an effect similar to interest rate hikes. “Basically, that means monetary policy has less work to do,” Powell said. However, there is still a great deal of uncertainty at the moment. The Federal Reserve (Fed) failed to live up to investors’ hopes of interest rate cuts in the near future. The US stock exchanges reacted on Wednesday with significant price losses, but at the start of trading on Thursday things initially went up again.
The Swiss National Bank is also raising interest rates
The Swiss National Bank (SNB) also followed the Fed’s example. After the emergency takeover of the struggling major bank Credit Suisse by rival UBS, coordinated by the Swiss government at the weekend, the SNB raised the key interest rate by 0.50 percentage points to 1.50 percent. In doing so, the currency watchdogs want to counteract the further increase in inflationary pressure, as they announced in Zurich. It was the fourth rate hike in a row. In addition, it cannot be ruled out that additional interest rate hikes will be necessary to ensure price stability in the medium term.
Norway’s central bank has ended its interest rate pause and raised the key interest rate again in the fight against high inflation. The key interest rate rose by 0.25 percentage points to 3.00 percent, the central bank announced on Thursday. The central bank made it clear that the key interest rate could be raised again in May. With the most recent increase, the key interest rate in Norway reached its highest level since 2009. Norway’s central bank was one of the first central banks to abandon the zero interest rate policy in 2021 and began to raise key interest rates. From May 2022, the pace of rate hikes increased significantly. Since last December, however, the central bank has temporarily paused interest rates.
