Central banks are leaning hawkish as the energy shock raises the risk of second-round effects on wages and prices. Multiple policymakers tightened this week, and official communication stresses there is no pre-set path.
According to published central bank decisions, the UK hiked 25bp to 4.00% on an 8-1 vote, with minutes flagging further tightening if energy costs feed into pay. Canada also went 25bp to 2.5%, with Governor Macklem signaling more may be needed but proceeding meeting by meeting. A 25bp hike to 4.85% came on a hawkish 6-3 vote elsewhere, and another central bank lifted its rate 25bp to 2.0% with guidance for more over the coming year. Norway held at 4.5%, with Governor Bache saying rates will stay elevated and could rise if needed.
Researchers covering the ECB note Isabel Schnabel framed policy as a timely response to inflation persistence, while President Lagarde publicly downplayed spillovers from AI-related hyperscaler bond issuance to euro sovereign yields. BOJ Governor Ueda, meanwhile, pointed to ageing and corporate capex narrowing Japan's saving-investment gap.
A more balanced tone came from Sweden's Riksbank under Governor Thedéen, awaiting inflation data before its mid-December call. Ukraine hiked 50bp to 16.5%, while Hungary cut 50bp to 15.75% and signaled a long hold.
By the numbers:
• Policy rates: Fed 3.75–4.00%, ECB 2.50%, BoE 3.75%, BoJ 1.25%.
Charts: finchiefs.com/data/policy-rates