Banks Hike Rates Amid Persistent Inflation Worries

Central banks around the world were in focus last week as they met to discuss interest rates and inflation. The US Federal Reserve, Bank of England, and Bank of Japan all held meetings, but the market reaction was relatively muted.

The Fed voted unanimously to raise rates by 0.25% to 3.75-4%, with a large majority forecasting at least one more hike this year. Chairman Kevin Warsh said 'inflation is too high and has been for too long' and that policy must be confident it's moving towards its target.

The Bank of England, as expected, left rates unchanged in a 6-3 vote but hinted at a rate hike for their next meeting on Bonfire Night. Headline inflation is now expected to reach 4% early next year.