LONDON, (Reuters) – Major central banks are aggressively reducing post-pandemic stimuli and increasing the rate of interest rates hikes in an effort to keep up with surging inflation.

On Tuesday, the Reserve Bank of Australia delivered a surprise hawkish surprise by a half point rate increase, following the lead of Canada, the United States and New Zealand.

The European Central Bank, which is more prudent than ever before signaled a number of rate increases and ended an extensive stimulus program.

This is where the policymakers are at the moment on how to get out of the stimulus that triggered the pandemic. It’s ranked according to hawkishness.

Graphic: Rate hike checklist – https://graphics.reuters.com/GLOBAL-CENTRALBANKS/zdvxowbjbpx/chart.png

1) NORWAY

Norges Bank in Norway was the first developed country to initiate a rate-hiking cycle. It has increased rates three times over the past year. On June 23, it is anticipated to raise its 0.75% interest rate once more and plan seven more by the end-2023.

Graphic: Most major central banks are hiking interest rates – https://fingfx.thomsonreuters.com/gfx/mkt/gdvzyeljxpw/RATES0706.PNG

2) NEW ZEALAND

In addition to being one of the world’s most hawkish central banking institutions, the Reserve Bank of New Zealand raised its official cash rate by 50 basis point (bps), to 2% on 25 May. This was a new record since 2016. This was their fifth rate hike in a row.

The rate projections for the next year were to increase by 4% and remain there through 2024. New Zealand inflation was at 6.9% for the past three decades, versus an average of 1-3%.

Graphic: New Zealand among the most aggressive central banks – https://fingfx.thomsonreuters.com/gfx/mkt/jnvwezdkqvw/NZ0706.PNG

3) CANADA

On June 1, the Bank of Canada announced a second 50-bps rate hike to 1.5%. It also stated that it will “act more forcefully” as necessary.

Tiff Macklem said that April inflation was 6.8%. He did not rule out an increase of 75bps or more and suggested rates could rise above the neutral range of 2% to 3% for a time.

Paul Beaudry (Deputy BoC Governor) has warned against “galloping” inflation. Markets price unprecedented third consecutive 50-bps increases in July.

4) BRITAIN

Since December, the Bank of England raised rates 4 times. Last month was the quarter-point increase. The Bank of England’s key rate, 1%, is the highest it has been since 2009.

Markets expect another rate increase on June 16, and rates will end 2022 at a higher level than 2%. Some policymakers are cautious due to Britain’s declining economic outlook.

Graphic: UK inflation is at a 40-year high – https://fingfx.thomsonreuters.com/gfx/mkt/zgpomexlwpd/UK0706.PNG

5) UNITED STATES

Half-point rate hikes by the Federal Reserve are planned for June and July.

Markets expect the Fed funds rate to increase to between 1.25% and 1.50% on June 15, with a range of 1.25% to 1.50% by the end of year.

Also, the Fed plans to reduce its $9 trillion assets held during the pandemic.

Graphic: Central bank balance sheets are starting to shrink — slowly – https://fingfx.thomsonreuters.com/gfx/mkt/akvezrwyzpr/balancesheets070622.PNG

6) AUSTRALIA

On June 6, the Reserve Bank of Australia unexpectedly raised rates by 50bps, despite the economy making a strong recovery and the inflation rate at 5.1%. The RBA made its second consecutive rate increase after months of insisting on tightening policy.

Markets now forecast a 50 bps rate increase in July. The current 0.85% interest rate is expected to rise to 1.5% by August.

SWEDEN

Inflation-fighting latecomer, Sweden’s Riksbank increased rates by 0.25% in April. This was a quarter-point increase. Riksbank might now consider making bigger moves, with inflation hovering at 6.4% in comparison to its 2% target.

Although Riksbank stated as recently February that rates wouldn’t rise before 2024, it expects this year to see them increase two to three more times.

EURO ZONE 8)

A record 8.1% increase in inflation has made the European Central Bank hawkish.

The agency announced on Thursday that the bond buying will come to an end July 1st. Rates will then rise 25 bps in August and September. In 2011, it last raised rates.

The market price movement was 143 bps tightening at the close of the year compared to 138 bps prior to the ECB announcement. This means that the key -0.50% Deposit Rate is likely to move out of negative territory very soon.

Graphic: Euro zone inflation is at record highs – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkwxeovq/ecb0706.PNG

9) SWITZERLAND

Swiss National Bank has been under severe pressure to hike its -0.75% international interest rate. It is currently the lowest. At 2.9% inflation, which is nearing 14 year highs, price increases have not been within the SNB’s target of 0%-2% per annum since February.

Officials at the SNB insist that this inflation spike is temporary. Andrea Maechler (rate-setter) believes that the SNB would “not hesitate to” tighten its policy if inflation rates continue to be stubbornly high. She shined a spotlight upon the SNB’s June 16th meeting.

JAPAN

This leaves the Bank of Japan the only remaining holdout dove.

Haruhiko Kuroda, BOJ chief, says that the first priority is economic support. He stresses the need to maintain “powerful” monetary stimulus.

Japan’s core consumer price index rose 2.1% in April compared to a year ago, surpassing the BOJ’s target of 2% for the first-time in seven years. However, BOJ officials insist that cost-push inflation is temporary and shouldn’t lead to tighter monetary policies.

Graphic: BOJ and JP CPI – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrnbyjpm/BOJ%20and%20JP%20CPI.JPG