Central banks ramp up rates in November

In November the pace and scale of rate hikes delivered by central banks picked up speed as policy makers around the globe battle decade high inflation.

The central banks overseeing six of the 10 most heavily traded currencies delivered 350 basis points bps of rate hikes between them last month.

The Reserve Bank of New Zealand, the Bank of England, the Reserve Bank of Australia, Norway's Norges Bank, Sweden's Riksbank and the Reserve Bank of New Zealand all raised interest rates in November.

In November, the European Central Bank, the Bank of Canada, the Swiss National Bank and the Bank of Japan did not hold rate setting meetings.

Alexandra Dimitrijvic, an analyst at S&P Global Ratings, said that interest rates will continue to rise. The central banks' determination to bring down inflation suggests that policy rates need to go higher. Global financial markets have been on a roller coaster in recent weeks as investors try to gauge how fast and how far the U.S Federal Reserve and other major central banks are poised to raise rates to combat inflationary pressures, while fears of a slowdown in global growth are spreading.

Inflation could be slowing in the United States, with Fed officials due to meet on December 13 and 14 have brought cheer to markets in recent days.

On Wednesday, Fed Chair Jerome Powell said that the central bank could scale back its rate increases as soon as December Data from emerging market central banks showed a similar pattern. In November, eight out of 18 central banks delivered a total of 400 bps of rate hikes - up from 325 bps in October, but some way off the 800 plus bps monthly highs in June and July.

In November, the Indonesia, South Korea, Mexico, Thailand, Malaysia, the Philippines, Israel and South Africa all hiked rates, showing a shift towards Asia and away from Latin America and emerging Europe, where the cycle is nearing its end.

Nafez Zouk said that the rate hike cycle is past the most intensive phase, with the exception of a few countries.

In addition to the 150bps benchmark cut to bring rates down to single digits, Turkey, where President Tayyip Erdogan is pushing for lower interest rates, has delivered another 150 bps benchmark cut to bring rates down to single digits despite inflation running above 80 per cent.

Not all of the emerging market central banks in the sample had rate setting meetings last month.

The data shows that the central banks of the emerging market have raised interest rates by 7,165 bps year-to-date, more than double that of 2,745 bps for the whole of 2021, according to calculations.