Have interest rates risen around the world too?

This year, many things have happened that weren’t on our 2022 bingo cards. An Oscars slap that stopped the world, a year’s worth of rainfall in a week, and an $11 price tag on an iceberg lettuce all knocked us for six. But just as we were starting to get used to the unexpected, the Reserve Bank went and did something we’d all predicted. In fact, as of Tuesday, they’ve now done it an historic four times in a row.

That’s right, the RBA lifted interest rates by another 50 basis points to 1.85% in an attempt to dampen rising inflation, which currently sits at 6.1%. Increasing interest rates by 1.75% in four months has added roughly $770 a month to repayments on an $800,000 mortgage. Will they rise higher? Experts predict rates may continue to rise until they hit 3% or inflation starts to fall—whichever happens first.

The same situation is unfolding around the world, with nearly four dozen countries raising their interest rates since January as central banks in the United States, England, India and other nations push borrowing costs higher in a bid to contain climbing inflation.

United States

In June, the annual U.S. inflation rate hit a more than 40-year peak at 9.10%. Like RBA, the US Federal Reserve has raised interest rates four times already this year, increasing the federal funds rate from 0-0.25% to 2.25-2.5%. It is predicted rates will continue to climb, estimated to peak at 3.395% in January 2023.

England

By end of this week, The Bank of England is expected to push through the biggest interest-rate increase in 27 years in response to the worst case of inflation the UK has had in the last 40 years (9.4%). By the time you read this, interest rates will likely have risen to 1.75%, the highest since the global financial crisis in 2009.

Switzerland

In June, The Swiss National Bank surprised markets by delivering its first interest rate hike in 15 years. Apparently the 50 basis-point increase wasn’t on most citizen’s 2022 bingo cards, nor was inflation hitting a 29-year high of 3.4% mid-year. In September, SNB is expected to announce another rate hike of 50 basis points to 0.25% from the current -0.25%.

Saudi Arabia

Thanks in part to limits on domestic fuel costs, the oil-rich Gulf is among regions where inflation has stalled. Still, in response to recent US Federal Reserve hike, the Saudi Arabia Central Bank, also known as SAMA, raised its repurchase agreement rate by 75 basis points to 3%, and its reverse repo rate by a similar margin to 2.50%.

Brazil

13.25%. No, unfortunately that’s not a typo—that’s the current interest rate in Brazil. That’s a 11.25% increase since March 2021, owing largely to the nation’s double-digit inflation (11.4%) and high levels of public debt. Citing the surprising growth of Brazil’s economy and continuing concern about inflation next year, The Central Bank of Brazil’s rate-setting committee, known as Copom, are likely to raise rates to 14% by year’s end.