Central Banks Hike Rates Amid Inflation Fears

A recent wave of interest rate hikes by major central banks has left investors and businesses wondering about the future of financing costs.

According to a report from Coutts, the European Central Bank (ECB), US Federal Reserve (Fed) and Bank of England (BoE) have raised interest rates in response to inflationary pressures, but the impact on capital markets is still uncertain.

The ECB has increased its key rate by 0.25% for the second time this year, while the Fed also hiked rates by the same amount, its first increase since 2023. The BoE kept rates unchanged.

Market participants are now expecting interest rates to remain elevated for longer due to the potential productivity gains from artificial intelligence (AI) investment, which could support stronger economic growth.