Central Banks Step Up Interest Rate Hikes Amid Prolonged Energy Crisis

The global energy market is facing yet another shockwave as rising inflationary risks prompt central banks to tighten monetary policy. In response, the US Federal Reserve raised interest rates for the first time since 2023, joining the European Central Bank and the Bank of Japan in tightening policy.

The crisis has pushed US retail diesel prices to a record high of $6.50 per gallon this year, while Saudi Aramco warned European refiners not to expect crude deliveries next month after a Houthi strike damaged a key pipeline station near Riyadh airport.

The Bank of Japan raised its policy rate to 1.25%, the highest since 1995, though the yen found little support as the nominal differential with the Fed remains unchanged.