Despite a recent cooling in headline consumer price index (CPI) inflation rates across many economies, central banks across the globe are still raising interest rates due to the fear of persistent underlying inflationary pressures, according to Fitch's '20/20 Vision' chart pack. Headline CPI inflation rates, although still high, moderated in recent months and showed the first signs of abating in many of Fitch 20 countries—including the US, eurozone, Germany, Italy, Spain, Canada, Brazil, Russia, and Turkiye among others.

Central banks have continued with hiking cycles and policy interest rates have risen in many of the Fitch 20 countries in recent weeks. The Fed raised its funds target rate’s upper limit to 4.75 per cent, the European Central Bank (ECB) raised the main refinancing operations (MRO) rate to 3 per cent, and the Bank of England hiked bank rate to 4 per cent. Rate increases have also been seen in Switzerland, Australia, Canada, India, and Indonesia, among others.

Simultaneously, GDP growth exceeded expectations in the fourth quarter (Q4) of 2022 among many of Fitch 20 countries, including some of the world’s major economies, as per Fitch Ratings.

The US posted a 0.7 per cent quarterly non-annualised outturn, while the eurozone narrowly averted contraction and grew 0.1 per cent quarter-on-quarter (QoQ) as the energy crisis turned out to be milder than previously feared. China and the UK both recorded flat GDP QoQ—beating expectations of outright contraction.

Emerging markets have presented a mixed picture so far, as Indonesia and Mexico grew faster than expected, while Korea and—especially Poland—disappointed with quarterly declines.

Fibre2Fashion News Desk (DP)

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Global central banks continue rate hikes despite easing inflation