Central bankers around the world are enacting what could be the most dramatic tightening of monetary policy since the 1980s, risking recessions and upsetting financial markets as they try to deal with an unexpected spike in inflation.
The week began with a surprise move on Wall Street to price in a Federal Reserve rate hike of 75 basis points. Chairman Jerome Powell declared himself fully committed to bringing inflation back down, the greatest step by the US central bank since 1994.
Switzerland surprisingly boosted rates, while the Bank of England raised rates for the fifth time, this time by 25 basis points, and indicated that it will soon double the rate.
The bond market’s reaction to the coordinated removal of stimulus was so ferocious that the European Central Bank called an emergency meeting on Wednesday to address rising yields in some euro-zone countries.
