Central Banks Unite Against Energy Price Shock

Major central banks around the world are tightening their monetary policies in response to rising energy prices. The Federal Reserve has recalibrated its policy to a more restrictive stance, and several other central banks have raised interest rates or signaled future hikes.

The Reserve Bank of Australia has increased its interest rate three times this year to 4.35%, undoing last year's cuts. Markets are expecting another hike later this month. The Bank of England kept rates steady at 3.75% but warned that prolonged conflict in the Middle East may require tighter policy.

The European Central Bank raised rates for the second time this year and struck a hawkish tone, with markets pricing in at least one more hike by year-end. Meanwhile, the Bank of Japan hiked rates to a 31-year high of 1.25% as expected but didn't signal an explicitly hawkish stance.