LONDON (Reuters) – The world’s central banks are having to juggle the need to bring inflation under control by raising interest rates and calming markets after turmoil in the banking sector.

Following a rate hike limited to 25 basis points in the United States, the central banks of Switzerland, Norway and the United Kingdom all raised their rates.

Ten developed economies have raised rates by 3,290 basis points cumulatively since the start of the cycle. Japan is an exception by maintaining an ultra-accommodative policy.

1) UNITED STATES

The Federal Reserve raised rates by a quarter point on Wednesday, continuing its biggest monetary tightening since the 1980s.

After raising the federal funds rate target to 4.75%-5.00%, it hinted that it may soon halt the cycle of hikes. But its chairman, Jerome Powell, warned that the fight against inflation continued.

The Fed also reassured the markets on the collapse of the banks Silicon Valley Bank and Signature Bank by saying that there was no general weakness in the sector.

2) EUROZONE

The European Central Bank last week raised its deposit rate by another half point to 3%, the highest level since October 2008.

Investors expect rates to peak at around 3.5%, despite fears for the eurozone economy linked to tighter credit conditions, with the setbacks of Credit Suisse and SVB possibly making banks more cautious in the future. grant loans.

“We need to bring inflation under control in a ‘bold and decisive’ way,” Bundesbank President Joachim Nagel, an influential “hawk” on the ECB’s governing council, said on Wednesday.

3) CANADA

On March 8, the Bank of Canada became the first major central bank to halt monetary policy tightening in the face of expected easing inflation.

It kept the target for the overnight rate at 4.50%, after raising it by 425 basis points in total, and expects the consumer price index to return to around 3% in mid-2019. year.

4) UNITED KINGDOM

The Bank of England (BoE) raised its benchmark rate by a quarter point on Thursday and said it expects price increases to subside faster than before, despite the unexpected reacceleration of inflation on last month.

She said she had seen “significant and volatile movements” in global financial markets following the banking turmoil but that her financial policy committee deemed the British banking system to be “resilient”.

5) AUSTRALIA

Australia’s central bank raised its benchmark rate by a quarter point to 3.6% in March, the highest since May 2012, but suggested it may be nearly done with monetary policy tightening as consumer spending slows and the risk of an inflation explosion wanes.

Monetary policy is “in tight territory”, RBA Governor Philip Lowe said, adding that the board was ready to react if the data supported a pause.

6) NEW ZEALAND

The Reserve Bank of New Zealand (RBNZ) slowed its pace of monetary tightening, raising rates in February by half a point to a record high of 4.75%.

Minutes of the meeting showed that officials had considered a larger increase, of 75 basis points. The RBNZ also kept its final rate forecast at 5.5%, saying it was too early to assess the impact of the severe flooding that hit the country in January.

7) NORWAY

Norway’s central bank raised rates by 25 basis points to 3% on Thursday and signaled further hikes were to come.

Norges Bank has raised its rate forecast, expecting to raise it probably in May and June to 3.5% by the summer.

8) SWEDEN

The Riksbank raised rates by 50 basis points in February to 3% and signaled another hike was on the cards.

Core inflation remained very high in February, with a rate of 9.3% over one year, a level not seen since July 1991.

9) SWITZERLAND

The Swiss National Bank (SNB) raised its main interest rate by 50 basis points on Thursday to 1.5% and said its emergency takeover of Credit Suisse by UBS had ended the crisis.

With inflation at 3.4% in February, well above the target range of between 0% and 2%, the central bank chose to continue its efforts despite the banking turmoil by making its fourth consecutive rate hike.

The SNB also indicated that further increases were not excluded.

10) JAPAN

The Bank of Japan, the most dovish of the major central banks, kept interest rates very low at its March meeting, the last of outgoing Governor Haruhiko Kuroda.

The BoJ has not changed its yield curve control policy which it uses to cap interest rates on long-term debt. Investors expect the next governor, Kazuo Ueda, to phase out the program, possibly as early as this year, as inflation rises above the 2% target.

(Yoruk Bahceli, Samuel Indyk, Nell Mackenzie, Dhara Ranasinghe, Alun John, Naomi Rovnick, Harry Robertson and Chiara Elisei; graphics by Vincent Flasseur, Sumanta Sen, Pasit Kongkunakornkul and Riddhima Talwani, Laetitia Volga, editing by Kate Entringer)

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