Inflation plaque: Central banks worldwide increase policy rate

June 30, 2023 (MLN): In an effort to curb rising inflation rates, central banks around the world have been aggressively increasing interest rates, and have made it very clear that Inflation is still a problem.

Worldwide Interest Rates

Pakistan

SBP increased policy rate by 100 bps to 22%.

The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) decided to raise the policy rate by 100 bps to 22% in an emergent meeting, after deciding to keep the rates unchanged earlier.

United States:

The U.S. Federal Reserve opted to keep its interest rate at 5-5.25% but showed that two more rate hikes are anticipated later in the year.

This decision reflects the Federal Reserve's commitment to address inflationary pressures.

Europe:

Driven by the need to counter persistently high inflation, the ECB increased its benchmark refinancing interest rate by 25 basis points to 3.75%-4%.

United Kingdom (UK):

Marking the 13th consecutive rate hike since December 2021, the Bank of England raised its key interest rate by 50 basis points to 5%.

It is important to note that this increase was larger than anticipated.

Switzerland:

The Swiss National Bank increased its policy interest rate by 25 basis points to 1.75%.

It shows Switzerland's continued efforts to dampen inflationary pressures in the economy.

Turkiye:

The Central Bank of the Republic of Turkiye executed a significant interest rate hike of 650 basis points, raising it to 15%.

This move signifies a shift towards more conventional economic policies to cool down sky-high inflation.

Norway:

Norway's central bank raised its key policy rate by 50 basis points to 3.75%, reaching a 15-year high to control inflationary pressures.

The bank has also indicated its intention to pursue another rate hike in August. In addition, the central bank projects a further increase to 4.25% during the autumn.

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