Fastest rise in global interest rates for 30 years

Unrelenting inflation pressures have prompted the fastest rise in global interest rates since the early 1990s, as central banks move policy rates towards restrictive levels from extreme lows at the start of the year.

The surge in global interest rates and inflation is highlighted in Fitch’s latest ‘20/20 Vision’ chart pack.
The US Federal Reserve took market participants by surprise this week by raising interest rates by 75 basis points, which leaves the Fed funds target rate upper limit at 1.75%.

This was the most aggressive single move by the Fed since 1994, and followed an increase in US CPI inflation to a 40-year high of 8.6% year-on-year in May.

Other developed-market central banks have followed.

The Swiss National Bank increased its policy rate by 50 basis points to minus 0.25% and the Bank of England raised rates by 25 basis points to 1.25%.

Since the previous edition of the chart pack published in April, central banks in Australia, Brazil, Canada, India, Korea, Mexico, Poland, South Africa, Switzerland, UK and US have all raised policy rates. At the same time, government bond yields and CPI inflation rates continue to rise across most major economies.

Fitch’s bimonthly ‘20/20 Vision’ chart pack covers the 20 major economies that are the focus of Fitch’s Economics team’s global macro analysis and plots five years of high-frequency economic data for 20 variables, with consistent coverage across each country.