After interest-rate hikes by the central banks in Sweden on Tuesday, and in the United States on Wednesday, other monetary authorities followed suit on Thursday, September 22nd. The Bank of England raised its bank rate by 0.5 percentage points to 2.25%. The central bank explained its decision as a need to combat inflation and protect the value of the British currency:
Since August, wholesale gas prices have been highly volatile, and there have been large moves in financial markets, including a sharp increase in government bond yields globally. Sterling has depreciated materially over the period.
Raising its key interest rates by 0.75 percentage points, the Swiss central bank, SNB, explained:
The SNB is tightening its monetary policy further and is raising the SNB policy rate by 0.75 percentage points to 0.5%. In doing so, it is countering the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected.
South Africa’s central bank followed the international trend with a similarly sized increase in its repurchase rate. According to Bloomberg.com, this was “the biggest hike since September 2002” and took the repurchase rate to 5.5%.
The Bank of Norway stopped at a 0.25 percentage-point increase, putting its key interest rate at 2.25%. It, too, pointed to inflation as a motivating factor, both for raising the rate and for the relatively modest increase:
Inflation has risen rapidly over the past months and has been far higher than projected. The labour market is tight, but there are now clear signs of a cooling economy. Easing pressures in the economy will contribute to curbing inflation further out.
In a speech on September 20th, European Central Bank president Christine Lagarde explained that the central bank of the euro zone expects “to raise interest rates further over the next several meetings.”