Under the background of global "high inflation", countries have used their "trump card" to curb prices. This week, with the implementation of interest rate hikes in the Federal Reserve, many countries announced interest rate hikes in , and a new wave of "interest rate hikes" around the world are coming.
Multiple countries Central Bank announced a rate hike
On Wednesday (Wednesday), local time, the Federal Reserve Feder announced a rate hike 75 basis points, raising the target range of the federal funds rate to between 3.00% and 3.25%. This is not only the fifth rate hike this year, but also the first time since 2008 that it has exceeded 3%.
Data picture: Federal Reserve Chairman Powell. Photo by Sha Hanting, China News Service reporter
After the Federal Reserve announced a rate hike, it quickly set off a "rate hike" around the world. On September 22, the Bank of England, the Swiss National Bank, the Norwegian Central Bank, the Bank of South Africa, the Bank of the Philippines, the Bank of Vietnam, the Bank of Indonesia, and the Bank of Qatar announced interest rates.
Among them, the Swiss National Bank, the Bank of South Africa and the Bank of Qatar all raised interest rates by 75 basis points, consistent with the Federal Reserve; the Bank of England, the Bank of Norway, the Bank of Philippines and the Bank of Indonesia chose to raise interest rates by 50 basis points; the Bank of Vietnam took a "big step" and raised the refinancing rate and deposit rate by 100 basis points respectively. Prior to this, the Swedish central bank had taken the lead in raising the benchmark interest rate by 100 basis points.
China News Service reporter found that many central banks have raised interest rates many times this year. For example, the Bank of England announced a rate hike for the seventh time this year, the largest rate hike since 1995; the Bank of South Africa raised interest rates for the sixth consecutive time since November last year; the Bank of Qatar raised interest rates for the fifth time this year.
However, in this round of "interest rate hike", there are also central banks that "stand still" and even cut interest rates.
htmlOn September 22, the Bank of Japan announced that it would continue to adhere to the current monetary policy of exceeding , , and maintain the interest rate level unchanged; Turkey , after cutting interest rates by 100 basis points in August this year, lowered the benchmark interest rate by 2,100 basis points to 12%.Why did the "Super Central Bank Week" appear?
More than one central banks have intensively announced "rate hikes", one of the major reasons is to curb their own inflation.
Since the beginning of this year, the monthly CPI in many countries has remained high, setting new highs and even historical records.
Take the latest August CPI as an example. The US CPI rose by 8.3% year-on-year, higher than the market expectations of 8.1%; Sweden August inflation rate reached 9%, setting a new record since December 1991; the euro zone's mixed CPI rose by 9.1% year-on-year, the largest increase since record.
On April 5th local time, a customer passed by the egg container in a supermarket in San Mateo County, California, USA. Photo by Liu Guanguan, China News Service reporter
Faced with the "high fever" of inflation, the cost of living for residents "soared", and many countries can only choose to raise interest rates. But following the Federal Reserve's announcement of interest rate hike policies, some countries also have the consideration of reducing capital outflows and supporting exchange rate .
"Although the Federal Reserve manipulates its own monetary policy, the US dollar, as the world currency, will also affect the flow of international capital." Dong Dengxin, director of the Institute of Finance and Securities of Wuhan University of Science and Technology, told China News Agency, "The US rate hike may cause the world's funds to flow to the United States, and ultimately harvest global capital and trade, including the monopoly of the industrial chain."
This year, the Federal Reserve tightened its monetary policy many times, driving the appreciation of the US dollar, and non-US dollar currencies depreciate to varying degrees. Statistical results released by the World Bank show that in the first seven months of this year, 23 currencies including the euro and pound depreciated against the US dollar.
htmlOn 21, after the Federal Reserve announced its interest rate decision, the dollar index hit a 20-year high. On the 23rd local time, the US dollar index even stood at the 113 mark, continuing to hit a new high in 20 years. Meanwhile, the euro fell below 0.97 against the US dollar, continuing to hit a new low since January 2002. On the 22nd, the Korean won also fell below the 1,400 won mark against the US dollar during the session, setting a record low intraday in 13 years.In order to prevent excessive depreciation of the currency, in addition to hikes of interest rates, some countries have or are preparing to intervene in foreign exchange.
htmlOn 22, the Japanese government and the Bank of Japan announced the operation of buying the yen and selling the US dollar to interfere in the foreign exchange market.Recently, South Korean Finance Minister Qiu Qingho made an emergency statement that he would mobilize all possible measures to deal with unilateral fluctuations in the foreign exchange market and would take necessary measures for foreign exchange if necessary.Economic recession and debt crisis are coming one after another?
In order to curb inflation, the pace of interest rate hikes such as the Federal Reserve will not stop there.
"At present, the United States is still in the middle of the interest rate hike channel, and there is still a lot of room for interest rate hikes." Dong Dengxin said. The "dash map" reflecting the interest rate expectations of Federal Reserve officials also shows that the federal funds rate is expected to rise to 4.4%, 4.6% and 3.9% in the next three years.
According to market analysis, many countries may maintain a rate hike in synchronization with the Federal Reserve to curb inflation and stabilize exchange rates. "Most central banks around the world raise interest rates simultaneously to cope with inflation, which may put the world economy in recession," a study previously released by the World Bank showed.
The World Bank also expects that this will cause financial crisis to emerging markets and developing economies, causing lasting damage.
Chief researcher of the US and European Institute of China Center for International Economic Exchanges Zhang Monan previously pointed out in an interview that the foreign debt ratio of emerging economies is usually high. After the U.S. rate hike has pushed up the financing costs of US dollar, bringing greater debt repayment pressure to emerging economies.
Ragulam Rajan, a professor of finance at the University of Chicago Booth Business School, also said, "Many countries have never experienced a cycle of sharp rise in interest rates since the 1990s. They are already carrying a lot of debt, and borrowing operations during the epidemic have further increased their debts."
"If the US dollar appreciates further, it will become the straw that broke the camel's back." Gabriel Stern, head of emerging market research at the Oxford Economic Research Institute
, said bluntly.Previously, under the double pressure of a sharp depreciation of the local currency and high debt, Sri Lanka had declared bankruptcy. There are also many countries currently on the brink of the debt crisis.
International Monetary Fund (IMF) President Georgieva said in an event recently that with the tightening of the financial environment and the appreciation of the US dollar, 25% of emerging markets are in or close to debt difficulties, and more than 60% of low-income countries are facing debt difficulties.
"Historically, the US interest rate hike cycle and the US dollar strengthening cycle are often the fuse of the debt crisis in emerging markets. Typical cases include the Latin American debt crisis in the 1980s and the Asian financial crisis in 1997." Luo Zhiheng, chief economist of Guangdong Securities, said.
Luo Zhiheng believes that the domestic economy is fragile, the exchange rate depreciation is large, the balance of payments is imbalanced, the emerging markets with high short-term debt and unstable political situation continue to increase, especially non-oil-producing countries such as Argentina , Turkey, Eastern Europe, Hungary , Poland , and Middle East Egypt have higher risks.
(China News Service)
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