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GRAPHIC-Nordic central banks join the 50 bps rate hike club

07/04/2022 | 03:05am EDT

LONDON, July 4 (Reuters) - Norway and Sweden have joined the ranks of central banks opting for 50 basis-point interest rate rises, delivering their biggest policy tightening moves in two decades.

June saw the U.S. Federal Reserve upping rates by 75 basis points and the Swiss National Bank surprise with a half-point hike. That means the Bank of Japan is the only major developed world central bank still chanting the inflation-is-transitory mantra.

Here's a look at where policymakers stand in the race to contain inflation.


The Federal Reserve vaulted to the top-hawk spot on June 15, raising the target federal funds rate by three quarters of a percentage point to a 1.5%-1.75% range.

It acted days after data showed 8.6% annual U.S. inflation, triggering a market frenzy over potentially even more aggressive responses in the coming months.

The Fed is also reducing its $9 trillion stash of assets accumulated during the pandemic.


The Reserve Bank of New Zealand raised its official cash rate by 50 basis points (bps) to 2% on May 25, a level not seen since 2016. That was its fifth straight rate hike.

It projected rates to double to 4% over the coming year and stay there until 2024. New Zealand inflation reached a three-decade high of 6.9% in the year to Q1, versus a 1-3% target.


The Bank of Canada delivered a second consecutive 50 bps rate increase to 1.5% on June 1, and said it would "act more forcefully" if needed.

With April inflation at 6.8%, Governor Tiff Macklem has not ruled out a 75 bps or larger increase and says rates could go above the 2%-3% neutral range for a period.

Deputy BoC governor Paul Beaudry has warned of "galloping" inflation and markets price an unprecedented third consecutive 50 bps increase in July.


The Bank of England (BoE) raised interest rates by 25 bps on June 16, its fifth rate rise since December, taking rates to 1.25% -- the highest since January 2009.

Given that it sees UK inflation heading above 11%, it might well have to fulfil its promise to act "forcefully" if needed.


Norway, the first big developed economy to kick off a rate-hiking cycle last year, raised rates by 50 bps on June 23 to 1.25%, its largest single hike since 2002.

The Norges Bank plans to raise rates by 25 bps at each of its four remaining policy meetings in 2022, although larger increments are also possible, Governor Ida Wolden Bache said.


With the economy recovering smartly and inflation at a 20-year high of 5.1%, the Reserve Bank of Australia (RBA) raised rates by a surprise 50 bps on June 6. It was the RBA's second straight move after insisting for months policy tightening was way off.

Money markets price in another 50 bps rise in July.


Another late-comer to the inflation battle, Sweden's Riksbank delivered a half percentage point interest rate hike on June 30 to 0.75%.

The move was Sweden's biggest in more than 20 years.

As recently as February, the Riksbank had forecast unchanged policy until 2024, but governor Stefan Ingves now expects rates to hit 2% in early-2023 and said 75 bps moves are possible.


With euro zone inflation hitting 8.6% in June, the European Central Bank (ECB) will raise interest rates by 25 bps on July 21 for the first time since 2011 and again in September . The bank is also accelerating work on a tool to contain bond market fragmentation within the bloc. From July 1 it will also use proceeds from maturing German, French and Dutch bonds to buy debt from weaker markets such as Italy.


On June 16, the Swiss National Bank (SNB) unexpectedly raised its -0.75% interest rate, the world's lowest, by 50 bps, sending the franc soaring.

Recent franc weakness has contributed to driving Swiss inflation towards 14-year highs and SNB governor Thomas Jordan said he no longer sees the franc as highly valued. That has opened the door to bets on more rate hikes; a 100 bps move is now priced for September.


That leaves the Japan as the holdout dove.

On June 18, it maintained ultra-low interest rates and vowed to defend its cap on bond yields with unlimited bond-buying. It holds 10-year yields in a 0%-0.25% range.

BoJ boss Haruhiko Kuroda stressed commitment to maintaining stimulus though, in a nod to yen weakness, Kuroda called its rapid decline to 24-year lows "undesirable" as it heightened uncertainty.

Hedge funds, meanwhile, are betting it can't maintain huge bond-buying for ever. The BoJ may also face political pressure, given inflation may exceed the 2% target for the second straight month and elections loom in July.

(Reporting by Sujata Rao, Dhara Ranasinghe and Yoruk Bahceli; Additional reporting by Tommy Wilkes and Saikat Chatterjee Editing by Mark Potter and Andrew Heavens)

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.07% 0.5822 Delayed Quote.7.42%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.09% 0.68866 Delayed Quote.6.67%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.28% 94.734 Delayed Quote.12.51%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.05% 0.66906 Delayed Quote.0.24%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.05% 0.71054 Delayed Quote.-4.21%
BRITISH POUND / EURO (GBP/EUR) 0.07% 1.18193 Delayed Quote.-0.65%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.21% 162.564 Delayed Quote.4.79%
BRITISH POUND / SWISS FRANC (GBP/CHF) -0.01% 1.14807 Delayed Quote.-6.73%
BRITISH POUND / US DOLLAR (GBP/USD) -0.01% 1.2192 Delayed Quote.-10.78%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) 0.05% 0.64288 Delayed Quote.9.91%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.09% 0.75985 Delayed Quote.9.18%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.27% 104.498 Delayed Quote.15.20%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) 0.05% 0.73805 Delayed Quote.2.51%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.04% 0.7833 Delayed Quote.-1.95%
CHINESE YUAN RENMINBI / SWISS FRANC (CNY/CHF) 0.14% 0.139751 Delayed Quote.-1.59%
DANISH KRONE / SWISS FRANC (DKK/CHF) -0.03% 13.009 Delayed Quote.-6.21%
EURO / BRITISH POUND (EUR/GBP) -0.03% 0.846 Delayed Quote.0.65%
EURO / JAPANESE YEN (EUR/JPY) 0.19% 137.542 Delayed Quote.5.49%
EURO / SWISS FRANC (EUR/CHF) -0.08% 0.97133 Delayed Quote.-6.08%
EURO / US DOLLAR (EUR/USD) -0.05% 1.0314 Delayed Quote.-9.42%
HONGKONG-DOLLAR / SWISS FRANC (HKD/CHF) 0.11% 12.016 Delayed Quote.3.83%
INDIAN RUPEE / BRITISH POUND (INR/GBP) 0.13% 0.010315 Delayed Quote.4.90%
INDIAN RUPEE / EURO (INR/EUR) 0.11% 0.012182 Delayed Quote.4.33%
INDIAN RUPEE / JAPANESE YEN (INR/JPY) 0.40% 1.676924 Delayed Quote.9.89%
INDIAN RUPEE / SWISS FRANC (INR/CHF) 0.08% 0.011836 Delayed Quote.-2.12%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.02% 0.012563 Delayed Quote.-6.41%
JAPANESE YEN / SWISS FRANC (JPY/CHF) -0.37% 0.7062 Delayed Quote.-11.07%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) 0.45% 85.962 Delayed Quote.7.93%
NEW ZEALAND DOLLAR / SWISS FRANC (NZD/CHF) 0.22% 0.60712 Delayed Quote.-3.91%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.21% 0.64468 Delayed Quote.-8.06%
RUSSIAN ROUBLE / SWISS FRANC (RUB/CHF) 0.10% 0.015554 Delayed Quote.26.21%
SCHWEIZERISCHE NATIONALBANK 1.03% 5900 Delayed Quote.11.45%
SINGAPORE-DOLLAR / SWISS FRANC (SGD/CHF) 0.04% 0.687 Delayed Quote.2.35%
SWEDISH KRONA / SWISS FRANC (SEK/CHF) -0.01% 0.093568 Delayed Quote.-6.98%
US DOLLAR / BRITISH POUND (USD/GBP) 0.02% 0.82021 Delayed Quote.12.08%
US DOLLAR / EURO (USD/EUR) 0.05% 0.969556 Delayed Quote.11.38%
US DOLLAR / JAPANESE YEN (USD/JPY) 0.24% 133.333 Delayed Quote.17.49%
US DOLLAR / SWISS FRANC (USD/CHF) 0.00% 0.94162 Delayed Quote.4.59%
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