Energy Shock Triggers New Round of Rate Rises

The recent energy shock has prompted central banks in major economies to raise interest rates or warn of further increases, adding pressure on households and businesses.

The U.S. Federal Reserve raised its target range by a quarter percentage point to 3.75-4 percent on September 16, with all 12 voting members backing the move.

Fed Chairman Kevin Warsh said 'the plain fact is that inflation is too high and has been for too long,' and noted that the central bank could not control individual oil or food prices but could act to prevent those increases from generating broader inflation.

The Bank of Japan voted 7-2 on September 18 to raise its policy rate from 1 percent to 1.25 percent, signaling further rate rises in response to high oil prices and a weaker yen.