Inflation is a global problem, here’s how central banks are dealing with it

New York
CNN business

Like misery, inflation loves company. And as prices rise, they remain near 40-year highs, the United States has a lot

The perfect storm of stimulus money, strong demand for goods, geopolitical chaos and supply chain disruptions during the pandemic has led to soaring prices around the world.

In Great Britain, inflation is below 10%, the highest in the G7. In Turkey and Argentina, the annual inflation rate is expected to reach a staggering 80%.

The Federal Reserve announces its next interest rate decision on Wednesday, but central banks around the world are also raising rates in a bid to slow the economy and bring prices back down to earth. At least 75 have raised their benchmark interest rates in the past year, increasing the price of credit worldwide. Here’s what some of them are doing.

Current annual consumer inflation rate: 8.3%

Reference interest rate: 2.25-2.5%

Last rate hike: 75 basis points in July

Beginning of the mountain cycle: March 2022

The Federal Reserve is the world’s most important central bank—the US dollar has been the world’s main reserve currency for more than 70 years. This is why the meetings of the Federal Open Market Committee, where monetary policy is set, are watched very closely around the world.

The Fed has taken a dovish stance in recent months. In July, it introduced a second consecutive interest rate increase of 0.75 points, bringing the reference rate to a range between 2.25% and 2.5%. The bank is widely expected to implement another rate hike of 75 basis points Wednesday.

Inflation rate: 9.9%

Reference interest rate: 1.75%

Last rate hike: 50 basis points in August

Beginning of the mountain cycle: December 2021

The bank launched its biggest interest rate hike in 27 years in August, the first half-point increase since the bank became independent from the British government in 1997. to 1.75%.

The BoE’s September policy decision was due to be released last week, but was delayed by a week due to the death of Queen Elizabeth II. The bank is expected to hike again at its rescheduled meeting on Thursday as inflation remains more stubborn and the pound is near a 37-year low against the US dollar.

Inflation rate: 9.1%

Reference interest rate: 0.75%

Last rate hike: 75 basis points in September

Beginning of the mountain cycle: July 2022

The Eurozone raised interest rates for the first time in 11 years in July. The ECB raised interest rates by 50 basis points to 0%. Yes, that’s right, 0%. The rate had been negative since 2014 in an effort to boost weak economic growth.

Core inflation reached 8.6% in June, which contributed Saying that the ECB would be in line for a rate hike and more hikes. This month, the bank continued its tightening policy, with an increase of 75 basis points. The ECB covers 19 countries, with many very different economic conditions. Some analysts worry that heavily indebted countries such as Italy and Greece will suffer significantly from the hikes.

Current inflation rate: 2.5%

Reference interest rate: 3.65%

Last rate hike: 0 basis points in September

Beginning of mountain cycle: n/a

Unlike its peers in the West, China cut interest rates by a tenth of a percentage point last month from 2.1% to 2%, the second cut this year. This month, the bank has kept rates unchanged.

The bank is trying to revive the economy due to the ongoing stagnation, rising unemployment and property crisis. But investors were still surprised by the move, as China also faces the risk of rising debt, consumer inflation and pressure on the yuan.

A man walks past the People's Bank of China (PBOC) building on July 20, 2022 in Beijing, China.

Current inflation rate: 2.8%

Reference interest rate: -0.1%

Latest Rate Hike: Rates stayed the same in July

Beginning of mountain cycle: n/a

Economic growth has slowed in Japan this summer as pandemic-era savings are expected it would help promote a significant economy. The Bank of Japan also forecast that inflation would exceed its target this year and raised its price increase forecast for the year ending in March 2023 to 2.3% from 1.9%.

But the BOJ kept its key interest rates unchanged in July and maintained its short-term target of -0.1%. BOJ Governor Haruhiko Kuroda said he had “absolutely no plans” to raise interest rates.

“The economy is recovering from the pandemic. Deteriorating terms of trade in Japan are also affecting income outflows,” Kuroda told a news conference. “Consequently, we must continue our easy policy to ensure that rising corporate profits lead to moderate wage and price growth.” , he said.

Current inflation rate: 78.5%

Reference interest rate: 75%

Last rate hike: 550 basis points in September

The beginning of the route cycle: Nine ascents this year, but a continuous cycle

Argentina raised its interest rate by around 550 basis points to 75% in September. That increase followed a 950 basis point increase in August. The country is struggling with an inflation rate that rose to nearly 80% in 20 years in August.

For years, the Argentine government has borrowed heavily to finance its budget, accumulating debt. The country recently agreed to a $45 trillion debt settlement with the International Monetary Fund.

The price of bread in Argentina has taken an inflationary blow due to fluctuations in the prices of raw materials.

Current inflation rate: 7%

Reference interest rate: 3.25%

Last rate hike: 75 basis points in September

Beginning of the mountain cycle: March 2022

Price growth appears to be moderating in Canada. The country’s annual inflation rate fell to 7% in August, below analysts’ expectations of 7.3% and down from 7.6% in July. But while inflation appears to be coming down from its peak levels, it is still well above the Bank of Canada’s 2% target.