From Norway to the United States, via Switzerland and England, announcements by central banks that they raise their key rates once again fall one after another. Some, like in the US, are slowing down. Others, faced with inflation, do not let their guard down.
Fifth consecutive increase in the key interest rate of the Bank of Norway
The Bank of Norway, as expected, proceeded Thursday with the fifth consecutive hike in its key rate, which jumped 0.25 points to 2.75%, and hinted at a continuation of monetary tightening into the first quarter of 2023.” The Monetary Policy Committee believes that a higher key rate is still needed to limit inflation The central bank said in a statement. After three vigorous hikes of 0.5 points, then another one of 0.25 points, the Bank of Norway is thus following the roadmap it has set itself by continuing its monetary tightening, but with a more moderate amount to take account of the economic slowdown. ” The forecast for the Norwegian economy is more uncertain than normal, but if the economy develops as expected, the key rate will be around 3% next year “, estimated the governor of the bank, Ida Wolden Bache.
A 3.5% increase in the Bank of England’s key rate
The Bank of England (BoE) on Thursday raised its key rate to 3.5%, the highest since October 2008, to contain inflation which is close to 11% and despite a UK economy in recession. However, it has slowed the pace of monetary consolidation. The BoE’s Monetary Policy Committee (MPC) voted to ” an increase in the reference rate of 0.5 percentage points “, indicates the British institute in a statement, which is below the level of 0.75 points of the previous month, even if” further increases may be required ».
Switzerland continues to tighten its monetary policy
Also on Thursday, Switzerland raised its key rate by 50 basis points to 1%, continuing to tighten its monetary policy despite the recent deceleration in inflation in Switzerland. She has ” somewhat slowed down in recent months, settling at 3% in November. However, she stays well above the range that the Swiss National Bank (SNB) equates to price stability “. Its aim is that inflation does not exceed 2%. The SNB has slightly lowered its inflation forecast for 2022, to 2.9%, from the 3% forecast at its last quarterly meeting in September. By contrast , kept it at 2.4% for 2023 and raised it to 1.8% for 2024 (up from 1.7% previously).The SNB had already raised the key rate by half a percentage point in June and three-quarters in Sept. And, like the Fed, it should continue into 2023. « It cannot be ruled out that further rate hikes will be needed.warned its president, Thomas Jordan.
In the US, the Fed is cautiously slowing pace
In the United States, the Fed on Wednesday raised the main interest rate by half a percentage point, after raising it by three quarters of a point the previous four times, to control the country’s highest inflation in 40 years. This is now in the range of 4.25 to 4.50%. This is the highest level since 2007. And the Fed has warned that it is not time to stop yet: further hikes” it will be appropriate “, specified the institution. The Fed’s key rate was, until March, between 0 and 0.25%, a minimum level intended to support the economy during the Covid crisis by stimulating consumption.
The Turkish central bank continues to lower its key interest rate
For Unlike other world economies, the Turkish central bank lowered its key policy rate for the fourth consecutive month from 10.5% to 9% on November 24, despite inflation. After this drop, the central bank’s board still estimated that the reference rate had arrived” sufficiently in view of the growing risks to global demand “, the institution said in a press release. President Erdogan, who says he favors growth and jobs over price stability, had warned he wanted to see” single-digit rates by the end of the year Interest rates fell from 19% in September to 14% in December last year. Stable this year until the summer, they have been lowered every month since then, while inflation has accelerated at the same time. The State, who will re-elect next June, claims, alone against everyone, that high interest rates favor inflation.
Expected half a percentage point in the Eurozone
0.50 percentage points is also the increase that should be announced this Thursday by the European Central Bank, after two increases” jumbo by 0.75 points in September and October. This would be consistent with the inflation curve which in November fell slightly in the euro area (the 19 countries that have adopted the single currency), to 10%, against 10.6% in the previous month, thanks to a standstill in energy costs. According to Carsten Brzeski, an analyst at ING bank, the impact of rate hikes on the real economy is already significant, because the tightening of credit conditions had been anticipated so that ” average rates on loans to businesses and households have increased significantly ». In any case, ” we are waiting for a strong message from the central bank that further rate hikes are needed and that it is too early to expect rates to hike yet warns Franck Dixmier, global director of bond management at Allianz Global Investors. Because the rise in prices remains very far from the 2% target set by the monetary institution.
(with AFP)
