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Central banks are rapidly raising interest rates in the most widespread monetary tightening in more than two decades, according to an analysis by the Financial Times, which reveals a reversal of a historically dovish stance.
Policymakers around the world have announced more than 60 interest rate hikes in the last three months – the largest number since at least the early 2000s.
The numbers illustrate the sudden and widespread reversal in monetary policy that has been in place since the global financial crisis of 2008 and further accelerated during the coronavirus pandemic. Interest rates in most advanced economies have hovered near unprecedented lows, and in some cases even turned negative, over the past decade.
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The policy change comes as inflation in many countries has hit multi-decade highs, fueled by rising energy and food costs since Russia invaded Ukraine in February.
“The world’s central banks have embarked on the most coordinated tightening cycle in decades” – Jennifer McKeown, head of global economic services at Capital Economics
Of 20 major central banks, 16 are likely to hike rates over the next six months, McKeown added, with the US and UK likely to tighten the fastest.
How have higher interest rates affected you? Let us know about your experience at [email protected] and we may feature it in the newsletter. Thank you for reading FirstFT Europe/Africa. Here’s the rest of today’s news – Jennifer
Five more stories in the news
1. UK CEO salaries are recovering to pre-Covid levels FTSE 100 chiefs’ salaries have averaged £3.6m, according to Deloitte.
2. Ukraine withstands Russian attack in Donbass Serhiy Haidai, governor of the Luhansk region, which covers half of Donbass, said yesterday Ukraine has pushed back Russian troops and allowed the armed forces to get supplies in Sievierodonetsk, the last major city in the region under Kiev’s control.
3. Denmark will vote for closer EU defense ties Danes will vote on Wednesday on whether to give up their opt-out from the bloc’s defense and security policies, the latest possible change in European policy following Russia’s invasion of Ukraine. Denmark has voted against EU referendums in the past and is the only member state not involved in the bloc’s defense cooperation.
4. The UK housing market is beginning to slow down According to data from real estate portal Zoopla, the country’s red-hot real estate market is beginning to cool as a growing number of sellers lower asking prices and the average time to sell a home is lengthened.
5. Dubai-based P&O Ferries owner hailed redundancies as “great work”. Sultan Ahmed bin Sulayem, chairman and chief executive officer of DP World, insisted it was too late to reverse the decision to lay off 800 seafarers as he praised management’s restructuring of the British company and on the sidelines of the World Economic Forum in Davos spoke to the FT.
The day ahead
economic data EU consumer and business sentiment surveys are out, as are the May consumer price indices for Germany and Spain and the Italian producer price index for April.
WHO meeting The Executive Board of the World Health Organization is holding its 151st session in Geneva today.
memorial day The United States observes Memorial Day to commemorate fallen military personnel. Financial markets are closed and President Joe Biden will attend a memorial service at Arlington National Cemetery.
What else do we read?
What is America’s endgame to the war in Ukraine? The Biden administration is attempting a delicate balancing act between arming Ukraine and reassuring allies worried about a protracted conflict. While Washington has said it will support Ukraine’s war effort, what a strategic defeat by Russia would actually look like is less clear.
Victor Orban’s bench Hungary’s prime minister has long sought economic clout to match his political power. Now his plan to merge three of the country’s largest banks into a single institution is becoming a reality, realizing hopes of serving his political goals as well as his clients.
Viktor Orbán can now trace what bankers and others call his coveted legacy: securing economic and ideological supremacy © FT Montage/Reuters
Private equity cannot avoid being settled in the markets Both the real economy and the financial system have entered an uncertain and destabilizing phase. That means trouble for private and public investors, writes Mohamed El-Erian.
Why Africa’s Covid Vaccine Factory Has Few Customers The reluctance to get coronavirus vaccinations – and poor health infrastructure – mean Africa could be plagued by the disease long after Covid-19 has become endemic elsewhere, leading to stronger variants, experts warn.
Bull market rhymes lead to a turnaround in the investment cycle Bitcoin and FAAMGs (Facebook, Apple, Amazon, Microsoft and Google) are the latest example of a bull market – something history cannot rule out, writes Howard Marks, co-chair of Oaktree Capital Management.
meal
Whether fresh, frozen or canned, sardines are perfect for a sunny evening. The cooking creates an odor that appeals on a balmy night out with a glass of rosé in hand, writes Bee Wilson.
Considering how good they are, it’s surprising the Brits don’t eat sardines anymore © Carmen Palma
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