RPT-GRAPHIC-Central banks step up efforts to fight ‘rampant’ inflation
(Repeats the story from June 9 without changing the text)
LONDON, June 9 (Reuters) – Major central banks are rushing to ditch post-pandemic stimulus and step up the pace of interest rate hikes to tame soaring inflation.
The Reserve Bank of Australia on Tuesday became the latest to deliver a hawkish surprise with a half-point rate hike, following in the footsteps of the United States, Canada and New Zealand.
And the more cautious European Central Bank ended a long-running stimulus program on Thursday and signaled a series of rate hikes.
Here’s where policymakers stand on the road to pandemic-era recovery, ranked in terms of warmongering.
Norway’s Norges Bank was the major developed economy to launch a rate hike cycle last year and has hiked rates three times since September. It is expected to raise its rate again by 0.75% on June 23 and expects seven more moves by the end of 2023.
2) NEW ZEALAND
The Reserve Bank of New Zealand is also one of the most hawkish central banks in the world, raising the official exchange rate by 50 basis points (bps) to 2% on May 25, a level not seen since 2016. It s This was its fifth straight rate hike. .
It predicted rates would double to 4% over the coming year and stay there until 2024. New Zealand inflation hit a three-decade high of 6.9% during the year to the first quarter, against a target of 1 to 3%.
The Bank of Canada issued a second straight 50 basis point hike to 1.5% on June 1 and said it would “act more forcefully” if needed.
With April inflation at 6.8%, Governor Tiff Macklem did not rule out an increase of 75 basis points or more and said rates could rise above the neutral 2% to 3% range for some time. time.
BoC Deputy Governor Paul Beaudry has warned of “runaway” inflation and markets are pricing in an unprecedented third consecutive 50 basis point increase in July.
4) GREAT BRITAIN
The Bank of England has hiked rates four times since December, including the quarter-point move last month. Its key rate of 1% is at its highest since 2009.
Another rate hike is expected on June 16 and markets see rates ending 2022 above 2%. But Britain’s deteriorating economic outlook is making some policymakers cautious.
5) UNITED STATES
The Federal Reserve is expected to raise rates by half a point in June, July and possibly even beyond as jobs data shows no sign of the US economy collapsing under high inflation and rising borrowing costs.
The key federal funds rate is expected to reach a range of 1.25%-1.50% on June 15 and markets see it moving to 2.75%-3% by the end of the year.
The Fed is also reducing its reserve of $9 trillion in assets accumulated during the pandemic.
As the economy recovers smartly and inflation hits a 20-year high of 5.1%, the Reserve Bank of Australia surprisingly raised rates by 50 basis points on June 6.
Money markets are now pricing in the chance of another 50 basis point hike in July and see the current rate of 0.85% touch 1.5% by August.
A latecomer to the battle against inflation, Sweden’s Riksbank raised rates to 0.25% in April, by a quarter of a point. With inflation at 6.4%, against its target of 2%, the Riksbank could now opt for more significant measures.
After saying as recently as February that rates would not rise until 2024, the Riksbank expects to hike two or three times this year.
Record inflation of 8.1% has turned the dovish European Central Bank into a hawk.
He said Thursday that bond purchases will end on July 1, rates will rise 25 basis points later that month and again in September. It last raised rates in 2011.
Markets have moved to the price of 143 basis points of tightening by the end of this year from 138 basis points before the ECB statement, meaning the key deposit rate of -0.50% is expected soon get out of negative territory.
The Swiss National Bank is under pressure to raise its interest rate to -0.75%, the lowest in the world. Inflation is approaching its highest level in 14 years at 2.9% and price increases have been outside the SNB’s annual target range of 0% to 2% since February.
SNB officials insist the surge in inflation is temporary. But Andrea Maechler, head of rates, believes the SNB “will not hesitate” to tighten policy if inflation rates remain stubbornly high, shining the spotlight on the June 16 SNB meeting.
That leaves the Bank of Japan as the recalcitrant dove.
BOJ boss Haruhiko Kuroda said the top priority was to support the economy, underscoring the unwavering commitment to maintaining a “powerful” monetary stimulus.
Japan’s core consumer prices in April rose 2.1% from a year earlier, beating the BOJ’s 2% target for the first time in seven years. Yet BOJ officials have repeatedly stressed that such cost-driven inflation will prove temporary and will not result in a tightening of monetary policy.
(Reporting by Sujata Rao and Dhara Ranasinghe; Additional reporting by Tommy Wilkes, Saikat Chatterjee and Yoruk Bahceli; Editing by Emelia Sithole-Matarise)