US inflation escalates, World Central Bank tracks interest rate hike

Bisnis.com, JAKARTA – Central banks in various countries immediately accelerated the movement of benchmark interest rates to curb the inflation that is spreading in various countries including the United States, which exceeded 9.1% .

Reported by Bloomberg on Thursday (7/14/2022), Canada’s central bank raised interest rates by a full percentage point after a 50 basis point (BPS) hike.

Meanwhile, South Korea rose 50 BPS after several 25 BPS increases, and New Zealand rose 50 BPS in three consecutive meetings.

After a 75 bps increase from Chile’s central bank, a number of central banks in Asia also followed suit. Singapore’s central bank joined in the unexpected tightening on Thursday morning.

The Philippines followed soon after with an increase of 75 BPS. In fact, Australia’s high interest rate stakes are starting to resonate even more strongly.

“Central banks will continue to scrutinize evidence of slowing growth, until they believe the inflation genie is pushed back into the bottle,” Rabobank rates strategist Richard McGuire wrote on Wednesday. and Lyn Graham-Taylor in a note.

In the US, the inflation report has led to bets that the Federal Reserve will hike a full point later this month after a bigger than usual move in June. Even investors believe that the rise will reach 100 BPS at the July 26-27 meeting.

Investors said the Bank of England could potentially raise its benchmark interest rate by 50 basis points at its next meeting, more than twice as fast as before after Britain’s economy proved surprisingly strong in May.

Meanwhile, the European Central Bank has yet to start raising its benchmark interest rate. The euro fell below 1 euro to the dollar on Wednesday for the first time since 2002, following the report on inflation in the United States.

“Ultimately, monetary policymakers will control prices. [Namun]”It won’t happen fast enough to save households from a blow to their budgets or the central bank from a shock to their credibility,” said Tom Orlik, chief economist at Bloomberg Economics.


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