The Fed causes gyrations in financial markets
Despite a sudden rally, pain lies ahead
AS CENTRAL BANKS do battle with the worst inflation for a generation, they are putting the easy-money policies of the past decade into reverse. This week the Federal Reserve raised interest rates by half a percentage point and announced that it would soon shrink its portfolio of bond holdings. The Reserve Bank of Australia, which not long ago was predicting it would keep rates near zero until 2024, surprised investors by increasing them on May 3rd by a quarter-point. As we published our weekly edition the Bank of England was expected to raise rates to their highest level since 2009.
This article appeared in the Leaders section of the print edition under the headline “The rate fate that awaits”
Leaders May 7th 2022
- How to save the Supreme Court from itself
- Wearable technology promises to revolutionise health care
- The Fed causes gyrations in financial markets
- How the West should respond to China’s search for foreign outposts
- Press freedom is under attack. It needs defenders
- How to solve Britain’s dirty-money problem
From the May 7th 2022 edition
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