LONDON (Reuters] – The extraordinary stimulus that was unleashed by the central banks to help economies survive the COVID-19 crisis is now over. Australia and the United States are moving away this week from providing substantial support.

However, policymakers are also resisting investor expectations of a series of interest rate increases. They wait to see if inflation stays steady than they expect. On Thursday, the Bank of England shocked markets by keeping rates at their current levels.

This is a snapshot of where policymakers are at the moment regarding how to get out of stimulus that was created during the pandemic.

(GRAPHIC: Central bank balance sheets – https://fingfx.thomsonreuters.com/gfx/mkt/egvbkaneypq/cbanks0311.PNG)

1 NORWAY

Norway’s central banking raised its key interest rate by 25 basis point to 0.25% in September. It also stated on Thursday that they plan to tighten in December.

This makes Norges Bank one of the largest central banks for developed economies in curbing excessively loose policy and bolstering Norway’s crown.

(GRAPHIC: Rate hike outlook boosts Norway’s crown – https://fingfx.thomsonreuters.com/gfx/mkt/dwpkregyevm/NOK0311.png)

2 NEW ZEALAND

Last month, the Reserve Bank of New Zealand raised rates to 0.5% for the first-time in seven years. Markets are now pricing in another 0.25% increase at their Nov. 24 meeting.

New Zealand’s Consumer Price Index has risen, and the unemployment rate at record levels. The policymakers have warned that New Zealand’s hot housing market will not last.

The August 2022 rate at which traders bet will surpass 2%

(GRAPHIC: Central bank interest rates – https://fingfx.thomsonreuters.com/gfx/mkt/xmvjorgybpr/Rates0311.PNG)

3/ CANADA

Last week, the Bank of Canada announced that it would end its bond-buying program due to a robust economy and high COVID-19 vaccine rates.

The Fed also indicated that interest rates may rise by April 2022. It said that inflation will remain high for most of the next year. This puts Canada in the hawkish camp.

(GRAPHIC: US jobs key to Fed outlook – https://fingfx.thomsonreuters.com/gfx/mkt/xmpjororkvr/Fed0411.PNG)

4/ UNITED STATES

Federal Reserve will continue to slow down its exit from policy. The Federal Reserve announced this week that it would “taper” $120 billion in monthly asset purchases until mid-2022.

The central bank stressed, however, that tapering is not a sign of a rate increase. It expects higher inflation “transitory” and said that a decrease in rates will not be imminent. Jerome Powell, Chair of the Central Bank said that they would wait until there is more job growth to tighten before increasing rates.

(GRAPHIC: Markets react to BOE rate decision – https://fingfx.thomsonreuters.com/gfx/mkt/xmpjorobkvr/GB0411.png)

5/ BRITAIN

With a vote of 7-2 by policymakers, the Bank of England canceled market hopes for an interest rate increase on Thursday. They decided to keep rates at record lows of 0.1%.

However, the central bank of Britain stated that it will be necessary to increase rates in “coming months” if data on labour markets is consistent with expectations.

Though several policymakers have recently given strong signals that they needed to raise interest rates quickly, only to be voted against by one of them, the money market scrambled on Thursday to reduce expectations. A February increase is currently priced in at $22.

6/ AUSTRALIA

Australia’s central banking system is in the dovish camp but not enough.

Tuesday’s major move by the Reserve Bank of Australia towards ending pandemic stimulation was a huge step. They abandoned an ultralow bond yield target to open the way for a rate increase in 2023.

Philip Lowe, the Governor of Pennsylvania, promised patience in pursuing policy. However, he rejected any market speculation about an increase as early as May.

7/ SWEDON

The market expects that Sweden’s interest rate of 0% will increase 75 basis points by Q3 2024. This is in contrast to the Riksbank view which sees unchanged rates for this time.

The company has ended all pandemic-era loans, but stated that rates would rise only in the event of significant inflation pressures.

The inflation rate, which is currently at more than 10 years highs, will rise to 3% in the next year. But it should ease by then. Stefan Ingves, a bank boss believes that an inflation excess is easier to manage than an undershoot.

8/ EURO ZONE

European Central Bank continues to be dovish. Christine Lagarde is a chief economist and believes that an increase in the rate of interest for 2022 will not be possible because inflation is too low.

Markets are betting on the ECB raising rates next year, with inflation now at a record high of 13.3%. However Lagarde is rebuking that prediction.

The ECB is likely to continue asset purchases even after the end of its emergency bond-buying programme for pandemic relief in March. Long-term inflation pressures are still weak.

(GRAPHIC: Life after PEPP – https://fingfx.thomsonreuters.com/gfx/mkt/myvmnkmyjpr/PEPP0311.PNG)

JAPAN

Japan is an anomaly. Last week, the Bank of Japan dismissed fears that weakening of the yen might fuel inflation. This has led to wholesale price growth reaching 13-year highs.

BOJ reduced its forecast of consumer inflation for March 2022 from 0.6% to 0% and cut this year’s forecast for economic growth. This is a sign that the BOJ will maintain its short-term target rate at -0.1%.

(GRAPHIC: BOJ – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkregzkpm/BOJ.JPG)

SWITZERLAND 10

It is possible that the Swiss National Bank will fall behind its peer banks in raising from -0.75% which currently represents the lowest benchmark interest rate worldwide.

The SNB, unlike the Fed and the ECB hasn’t modified its structure to allow for a lower inflation tolerance threshold. This means that it will need to respond if inflation rises beyond its price stability target, which is just below 2.2%.

Swiss inflation has reached a record high of 0.94% over the past two years. The markets expect a rate hike of 25 basis points by 2022.

Due to some speculation on the market that the ECB could tighten, the Swiss franc has been trading at close to 11-month highs versus its euro counterpart.

(GRAPHIC: SNB – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkanoavq/SNB.JPG)