Global rate-hike cycle in view as central banks take on inflation — SkimNews
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- Bank of Japan became the latest major central bank to tighten on Friday, joining the Federal Reserve (Wednesday) and the ECB (last week) in raising rates; BOJ Governor Kazuo Ueda declared "our policy phase has changed."
- New Fed chair Kevin Warsh raised rates Wednesday despite President Trump's public demands for cuts, with the unanimous decision backed by quarterly projections showing 16 of 18 policymakers anticipate at least one more quarter-point hike by year-end.
- ECB Vice President Boris Vujcic told Reuters "the expectation now is that energy prices will stay elevated for longer," with two sources saying a December hike — the ECB's third this year — is more likely than an October move.
- Bank of England held rates Thursday but Governor Andrew Bailey warned they "may have to go up if the war continues," with financial markets pricing almost four quarter-point hikes over the next year.
- JPMorgan's Greg Fuzesi said the rate peak is "uncomfortably dependent on events in the Middle East," adding that a hike above 3% "cannot be ruled out entirely."
- The Houthi advance along the Red Sea coast and the collapse of a short-lived US-Iran pact have reversed the late-summer market expectation that energy prices would retreat.
Why it matters: Markets are pricing nearly four quarter-point BoE hikes over the next year, and 16 of 18 Fed policymakers project at least one more hike by year-end — raising borrowing costs for consumers and businesses in lockstep globally. JPMorgan's Greg Fuzesi flagged that the rate peak is "uncomfortably dependent on events in the Middle East," with a move above 3% not ruled out.
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