Global Rate Tightening Cycle Takes Shape as Central Banks Raise Rates

The global interest rate tightening cycle is taking shape as central banks around the world raise rates to combat inflation. The Bank of Japan lifted its interest rates to a 31-year high, with Governor Kuroda indicating that the central bank has moved into a new phase aimed at preventing inflation from exceeding its target.

The Federal Reserve raised rates earlier in the week for the first time in three years and indicated additional increases would follow in coming months. Fed Chairman Kevin Warsh made hawkish comments following the decision, saying 'The two-year is going to be moving in tandem with hike pricing.'

Traders now see a more than 55% probability of another rate increase when the US central bank meets in October, according to CME FedWatch. This expectation stood at 53% late Thursday.