LONDON, (Reuters) – The Bank of England raised interest rates on Thursday for the third consecutive day. This comes a day after the U.S. rate was lifted for the first-time since 2018. It is a signal that central banks have a determination to control inflation despite growing risks.

Russia’s invasion of Ukraine has dimmed the future outlook for global economic growth by creating a spike in food and energy costs that causes more pain for both consumers and businesses.

While many people are concerned about containing inflation they also worry about the consequences of conflict. This is where the policymakers are at this point in relation to exiting pandemic-era stimuli. It’s been ranked according to hawkishness.

Graphic: Central bank balance sheets about to get a touch smaller: https://fingfx.thomsonreuters.com/gfx/mkt/klpykbllrpg/CBANKBALANCESHEET.PNG

1) NORWAY

Norway began its rate liftoff in September, and raised its key rates in December to 0.5%.

Norges Bank expects to increase their rates again in March. Nordea is expecting four rate rises in the coming year.

2) NEW ZEALAND

The Reserve Bank of New Zealand increased its key rate to 1% last month by 25 basis points and predicted a stronger peak during the tightening cycle.

It stated more must be done to curb inflation.

The markets are optimistic about a 0.5% rise in April and anticipate rates reaching 2.75% at year’s end.

Graphic: New Zealand’s key rate rises to 1%: https://fingfx.thomsonreuters.com/gfx/mkt/zgvomzwdevd/NZrates.PNG

3) BRITAIN

In its third consecutive rise, the Bank of England raised its key interest rate by 25bps to 0.75% Thursday. However, the Bank of England lowered its expectations about the need to increase due to the impact that soaring fuel prices have had on the economy.

As investors reduced their hopes that the BoE will raise interest rates quickly this year, the pound fell almost one cent to the dollar.

Graphic: UK inflation surge: https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkorgkvx/UKINFLATION.PNG

4) UNITED STATES

On Wednesday, the U.S. Federal Reserve raised its key rate by 25% to 0.25-0.5%. It also laid out a plan for tightening monetary policy to control inflation. The current level is almost 8.

Most policymakers now see the federal funds rate rising to a range between 1.75% and 2% by the end of 2022, the equivalent of a quarter-percentage-point rate increase at each of the Fed’s six remaining policy meetings this year.

Analysts see May now as a date to begin unwinding quantitative ease.

Graphic: U.S. joins the rate hike club: https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrlxngvm/RATES1703.PNG

CANADA – 5)

The Bank of Canada raised the key rate one quarter percent to 0.5% March 2, its first rate hike since October 2018.

The BoC isn’t likely to be influenced by global uncertainties in its fight to control inflation, which has been at an all-time high for 30 years. Tiff Macklem of BoC says the BoC has “considerable” room to increase rates this year, but doesn’t exclude a move up to 50 bps.

Graphic: Canada hikes interest rates: https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrlynnvm/CANADA0903.PNG

6) AUSTRALIA

At its March 1 meeting the Reserve Bank of Australia maintained rates at 0.1%, setting a new record. It cited uncertainty from Ukraine’s crisis.

RBA has rejected expectations that it will raise rates early after ending the bond-buying programme. Even though the economy has grown faster than anticipated, the war has reinforced its dovish position.

EURO ZONE (7)

The ECB will end asset purchases during the third quarter. This would accelerate its exit from extraordinary stimuli. It predicts that inflation will average 5.1% by 2022. That’s more than twice its target.

Russia is likely to have a “material effect” on economic activity. According to the ECB, any interest rate adjustments after the asset purchase will be “sometime later”. The ECB stated that they would occur in a “gradual” manner.

The market prices in tightening of almost 50 basis points per year by the end of this fiscal year, which is equivalent to five 10-bps increases.

Graphic: Russia’s attack on Ukraine a headwind for Europe: https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrlqogpm/banks0803.PNG

SWEDEN

According to Governor Stefan Ingves, the rising inflation may force Sweden’s central banks to raise its rates for the first time since the pandemic started.

Inflation in headlines was 4.5% in February. It did not include volatile energy prices. This is the highest point since 1993.

Riksbank, Sweden’s central bank has set a 2024 rate rise. Ingves thinks this might be “a bit too distant.” Economists predict as much as two rate rises in this year.

JAPAN

Japan’s central bank targets of inflation of 2.2% are unlikely, even taking into consideration rising energy costs. Haruhiko Kuroda, Bank of Japan governor, said Thursday that Japan cannot see this happening. Thus, the Bank of Japan recommends keeping its monetary policy very easy.

As central banks around the world see rate increases, more BOJ members are dovish than they.

Graphic: Japan assets: https://fingfx.thomsonreuters.com/gfx/mkt/gkplgakonvb/Japanassets.JPG

10) SWITZERLAND

Swiss National Bank is still at the conservative end of the spectrum. They consider their stance to be appropriate despite inflation reaching 2.2% in February, which was the highest level since 2008.

The Ukraine conflict has prompted safety-seeking flows that have driven the Swiss Franc to its highest levels in relation to the euro, since January 2015 when it was devalued by the SNB.

Although franc strength can help contain inflation, it has created unease. The SNB intervened rarely about the Franc.

Graphic: chfintervention: https://fingfx.thomsonreuters.com/gfx/mkt/mypmnxyeevr/chfintervention.JPG