Business

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices rose about 3% on Friday supported by real and threatened cuts to supply, although futures were set for a second weekly decline as aggressive interest rate hikes and China’s COVID-19 curbs weighed on the demand outlook.

Russian President Vladimir Putin has threatened to halt oil and gas exports to Europe if price caps are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices.

Brent crude rose $2.70, or 3%, to $91.85 a barrel by 11:22 a.m. EDT (1522 GMT). U.S. West Texas Intermediate (WTI) crude rose $2.63, or 3.2%, to $86.17 a barrel.

“Over the coming months, the West will have to contend with the risk of losing Russian energy supplies and oil prices soaring,” said Stephen Brennock of oil broker PVM.

Pressured by worries about a recession and demand, Brent is down sharply from a surge in March close to its all-time high of $147 after Russia invaded Ukraine.

Despite Friday’s bounce, both crude benchmarks were headed for a weekly drop, with Brent down about 1.4% on the week after at one point hitting its lowest since January. WTI was on track for a weekly decline of 0.9%.

A U.S. Department Of Energy official said the White House was not considering new releases from the U.S. Strategic Petroleum Reserve (SPR) at this time beyond the 180 million barrels that President Joe Biden announced months ago. Earlier, Energy Secretary Jennifer Granholm told Reuters the administration was weighing the need for further SPR releases.

“The White House is backing off another release from the SPR,” said Phil Flynn, an analyst at Price Futures Group. “Looks like a lot of the fears the market had previously have gone away.”

Meanwhile, European Central Bank’s unprecedented rate hike of 75 basis points this week and more COVID-19 lockdowns in China have weighed on prices.

The city of Chengdu extended a lockdown for most of its more than 21 million residents on Thursday while millions more in other parts of China were told to shun travel during upcoming holidays.

(Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler in London, Sonali Paul in Melbourne and Jeslyn Lerh in Singapore; editing by Jason Neely and Marguerita Choy)

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LONDON (Reuters) -Pentwater Capital Management LP, the second-largest shareholder of Turquoise Hill Resources Ltd, said on Friday it opposes Rio Tinto’s acquisition of the Canadian miner, and was weighing legal options to thwart the deal.

The activist investor added that it now owns 11.67% of Turquoise Hill’s shares, after buying a further 1.73% stake on the open market.

Rio Tinto agreed on Sept. 1 to take over the 49% stake it doesn’t already own in Turquoise Hill after sweetening an initial offer by around 20% to “a best and final” $3.3 billion, hoping to boost the Anglo-Australian mining company’s chances of gaining direct ownership of the massive Oyu Tolgoi copper-gold mining project in Mongolia.

“The proposed price implies an equity value of $8.65 billion CAD, which is a fraction of the free cash flow that Pentwater expects Turquoise Hill to generate over the next decade,” it said in a release.

“Pentwater expects Turquoise Hill to generate over $10.5 billion CAD of free cash flow through 2030.”

Shares of Turquoise Hill, which fell 3% after Pentwater’s announcement, have gained more than 50% since Rio’s initial offer in March. Turquoise Hill’s minority shareholders are expected to vote on the proposed deal around the end of October.

Pentwater joins another minority shareholder, SailingStone Capital Partners, in publicly opposing Rio Tinto’s offer as too low.

Future demand for copper is expected to be strong due to the growth of electric vehicles, their charging stations and other renewable energy infrastructure, as the world gears up to decarbonise.

But prices of the metal have retreated from all-time highs on worries about slower demand from leading consumer China and global inflationary pressures.

Pentwater said it was evaluating legal options concerning the proposed deal.

(Reporting by Clara Denina and Ruhi Soni; Editing by Krishna Chandra Eluri and Paul Simao)

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(Reuters) -The European Central Bank must keep raising interest rates, prioritising its fight over painfully high inflation, even if that comes at a cost to growth, European Central Bank policymakers said on Friday.

The ECB raised rates by an unprecedented 75 basis points on Thursday just weeks after a 50 basis point move and promised several more steps over the coming months as euro zone inflation was at its highest rate in nearly a half a century and at risk of becoming entrenched.

“Inflation remains unacceptably high,” Peter Kazimir, Slovakia’s central bank chief said. “The priority now is to continue vigorously the normalization of monetary policy.”

Echoing his words, Dutch central bank chief Klaas Knot said that slowing growth was a necessary side effect of this inflation fight.

“We expect inflation to keep rising in the coming months, so that means we only have one problem on our plate: inflation,” Knot said in an interview with Dutch radio broadcaster BNR. “And that will mean that we will have to slow economic growth at least a bit to reduce inflation.”

While the ECB projected stagnating growth over the winter months, ECB chief Christine Lagarde acknowledged that many of the downside risks to this outlook have already materialised, particularly the loss of access to Russian gas, raising the risk of an outright recession.

Some have argued that raising rates now is futile because the inflation shock is caused by high energy prices and central banks are powerless against supply side shocks.

But French central bank chief Francois Villeroy de Galhau appeared to challenge that view, arguing that only half of the current inflation was due to food and energy prices, suggesting that price growth is now broadening out to hit all parts of the economy.

But Villeroy also seemed to push back against expectations for another extra large rate hike in October.

“We have our hands completely free. Nobody should speculate that this will be the magnitude of the next step – we did not create a new ‘jumbo habit’, he said in a speech.

Lagarde said it would take fewer than five meetings, including Thursday’s gathering, for the ECB to hit what it calls the neutral rate, where it neither stimulates nor slows growth.

That timeline suggests hikes at each meeting until early next year broadly in line with market expectations, which see the top of the cycle next spring.

While the neutral rate is not known, Villeroy upgraded his view on Friday, arguing that it was at below or close to 2%, replacing his previous estimate for somewhere between 1% and 2%.

Although big rate increases are still possible, Knot echoed Villeroy in that another 75 basis point move is not a given even if the inflation outlook remains poor.

“If the picture for inflation is still as bad in 6 weeks time, then we will make a strong move again. This doesn’t necessarily have to be 75 basis points though,” he said.

The ECB described both the July and September moves as “frontloading” and Lagarde said that 75 basis points is not the norm, though she also refused to rule out a similar step in October.

(Reporting by Robert Muller, Bart Meier and Dominique Vidalon; Writng by Balazs Koranyi; editing by John Stonestreet and Jane Merriman)

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By Hannah Lang

(Reuters) -Ethereum, the blockchain that underpins the world’s second-largest crypto token ether, will soon undergo a major software upgrade that promises to slash the amount of energy needed to create new coins and carry out transactions.

Here’s what you need to know about the “Merge” as the shift is known.

SO WHAT IS THE MERGE?

The Ethereum blockchain is due to merge with a separate blockchain, radically changing the way it processes transactions and how new ether tokens are created.

The new system, known as “proof-of-stake”, will slash the Ethereum blockchain’s energy consumption by 99.9%, developers say. Most blockchains, including bitcoin’s, devour large amounts of energy, sparking criticism from some investors and environmentalists.

The Ethereum Foundation, a prominent non-profit organisation that says it supports Ethereum, says the upgrade will pave the way for further blockchain updates that will facilitate cheaper transactions.

High costs and slow transaction times are currently two of the main issues users have with the Ethereum network.

WHEN’S IT HAPPENING?

Very soon. The Merge is scheduled for completion between Sept. 10 and 20, though the exact timing is uncertain. Independent estimates point to Sept. 15 as the likely date.

Major crypto exchanges, including Coinbase Global and Binance, have said they will pause ether deposits and withdrawals during the merge. Users won’t need to do anything with their funds or digital wallets as part of the upgrade, they say.

The Merge has been delayed in the past. Most recently, ether fell some 8% on April 11 after an Ethereum lead developer said plans for the event set for June had been pushed back as tests on the software continued.

HOW BIG OF A DEAL IS THIS?

Ethereum backers say the Merge is a monumental moment for the $1 trillion crypto sector.

Proponents believe the Merge will make Ethereum more favourable compared to arch-rival bitcoin – the world’s top cryptocurrency – in terms of price and usability.

That could see Ethereum applications become more widely used. Investors are betting the change will be significant for the price of ether, which has gained more than 50% since the end of June, compared to a slight loss for bitcoin.

PROOF-OF-STAKE? SOUNDS TECHNICAL

It is. But it’s also important.

There are different ways transactions on the blockchain – the software that underpins most crypto – can be verified. In the “proof-of-work” system currently used by Ethereum, new transactions are checked by crypto miners.

Miners use powerful computers that solve complex maths puzzles and update the blockchain, earning new crypto tokens. While this makes records on the blockchain secure, it’s highly energy-intensive.

In the “proof-of-stake” system, ether owners will lock up set amounts of their coins to check new records on the blockchain, earning new coins on top of their “staked” crypto.

SOUNDS LIKE A NO-BRAINER, RIGHT?

Maybe. While Ethereum developers say the “proof-of-stake” model has safeguards to ward off hackers, others say criminals could attack the blockchain under the new system.

If a single entity accumulated the majority of ether staked to validate new transactions, they could alter the blockchain and steal tokens. Crypto experts also say there is a risk that technical glitches could mar the Merge, and that scammers could take advantage of confusion to steal tokens.

It may also become easier for developers to build programmes on the Ethereum network, potentially boosting adoption. Still, those updates are likely months, if not years, away.

(Reporting by Hannah Lang in Washington; editing by Tom Wilson, Chizu Nomiyama and Susan Fenton)

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By Rajesh Kumar Singh

CHICAGO (Reuters) – A scramble by U.S. carriers to fill empty cockpits is fueling cost pressures just as mounting economic worries have cast a shadow on travel demand, sparking concerns about debt-laden airlines’ ability to repair their balance sheets.

Even as ticket sales remain strong, investors worry about consumer spending should the economy slip into recession. They fear carriers might be forced to borrow even more money to fund operations and further delay returning cash through share buybacks or dividends.

Some have stayed away from investing in the industry despite a rebound from the pandemic-induced slump, believing carriers do not have enough tools to offset cost pressures.

“Airline investors would be better off if the Wright Brothers’ plane crashed and burned,” said Act Two Investors Chairman Jeffrey Scharf, who follows the sector but does not currently own stocks in it.

“I can’t think of a worse business – high fixed costs, commodity product, worsening service, alienated customers sick of being nickeled and dimed for every amenity.”

For the traveling public, it could mean fewer and packed planes as airlines drive up revenue through higher ticket prices.

Reducing debt is a priority for an industry that went on a borrowing binge to survive the pandemic. The big three national carriers – American, United and Delta Airlines – had $85 billion in net long-term debt at the end of the second quarter. (Graphic: https://tmsnrt.rs/3Rt2qpp)

Airlines need strong and sustained profits to reduce those debt loads, but rising fuel and labor costs are making that difficult, analysts say.

United Airlines’ wage and fuel expense as a percentage of revenue is up by 10 points this year versus 2019. In the first six months of 2022, the company spent 59% of its revenue on wage and fuel bills. American Airlines has had similar increases.

“These carriers have multi-year balance sheet repairs ahead of them,” said aviation analyst Robert Mann. “Job No. 1 is going to be using free cash flow to pay down those increased debt levels.”

Cost pressures are set to worsen as a pilot shortage at smaller, regional carriers means dramatic pay increases.

Mesa Air Group, which operates flights for American and United, last month raised pilot salaries by as much as 172%.

That came days after CommutAir, a regional carrier partially owned by United, increased pilot wages by up to 40%. The increases were in response to American’s decision in June to raise pilot salaries at regional affiliates by as much as 87%.(Graphic: https://tmsnrt.rs/3D18lOj)

The wage hikes have cost implications for the whole industry as it pressures rivals to offer similar increases.

National carriers are also expected to feel the pinch as regional partners look to pass along increased costs. Raymond James analysts estimate pay raises at regional airlines could increase non-fuel operating costs at national carriers by up to 3.3 percentage points.

Pilots at national carriers are also pushing for big wage increases.

United is renegotiating with its pilot union after some pilots expressed reservations with the last agreement that included a double-digit pay hike.

American’s offer for pay increases of about 17% as well as higher per diem and training pay through 2024 – estimated to cost the company more than $2 billion – has failed to find favor with pilots.

Labor costs were the industry’s biggest operating expense last year at about 35%. That figure is only down this year due to a run-up in fuel costs, but the hiring push is expected to inflate wage bills.

Meanwhile, costs are expected to remain high. United has projected a 2022 fuel bill $9 billion higher than in 2019.

PRICING POWER

Airlines have been relying on strong consumer demand and higher fares to mitigate inflationary pressure.

Investors are not sure carriers will have the same pricing power should consumer demand slow. And corporate travel – the industry’s cash cow – has yet to recover to pre-pandemic levels.

“There’s a big question about who’s going to be flying, how often they’re going to be flying and the price that they’re going to be willing to pay,” said Tim Ghriskey, senior portfolio strategist at investment advisory firm Ingalls & Snyder.

American and United on Wednesday played down demand concerns, saying there has been no slowdown in post-summer travel bookings.

American said it has surplus cash it plans to use for paying off debt. However, it is holding that cash due to economic uncertainty.

Investors also want the return of share buybacks and dividends. As part of the federal COVID-19 relief package, airlines have been prohibited from buying back their shares. That ban is set to expire this month.

Non-fuel cost pressures are expected to ease once carriers begin operating as many flights as they did before the pandemic.

Most airlines are planning to ramp up capacity next year. But Michael Wall, portfolio manager at investment management firm Westwood Group, warned that could backfire in a recession.

“Once the demand goes away, their pricing power goes away,” he said.

(Additional reporting by Allison Lampert in Montreal, editing by Ben Klayman and Bill Berkrot)

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(Reuters) – Germany does not currently have to make alternative investments after the European Central Bank decided to temporarily pay interest on government deposits, a finance agency spokesperson told Reuters.

The ECB said on Thursday it would pay interest on governments’ cash deposits until April 2023, temporarily removing a 0% cap after it hiked rates.

The move follows concerns that governments could run down the cash and escalate a shortage of bonds used as collateral in the bloc, as a 0% cap would have meant deploying the cash in markets would have been more profitable.

“As it remains possible for us to deposit liquidity with the central bank at market conditions, as of today we don’t have to make use of alternative investment options,” the spokesperson said.

(Reporting by Yoruk Bahceli; editing by Jason Neely)

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By Rajesh Kumar Singh

CHICAGO (Reuters) – A scramble by U.S. carriers to fill empty cockpits is fueling cost pressures just as mounting economic worries have cast a shadow on travel demand, sparking concerns about debt-laden airlines’ ability to repair their balance sheets.

Even as ticket sales remain strong, investors worry about consumer spending should the economy slip into recession. They fear carriers might be forced to borrow even more money to fund operations and further delay returning cash through share buybacks or dividends.

Some have stayed away from investing in the industry despite a rebound from the pandemic-induced slump, believing carriers do not have enough tools to offset cost pressures.

“Airline investors would be better off if the Wright Brothers’ plane crashed and burned,” said Act Two Investors Chairman Jeffrey Scharf, who follows the sector but does not currently own stocks in it.

“I can’t think of a worse business – high fixed costs, commodity product, worsening service, alienated customers sick of being nickeled and dimed for every amenity.”

For the traveling public, it could mean fewer and packed planes as airlines drive up revenue through higher ticket prices.

Reducing debt is a priority for an industry that went on a borrowing binge to survive the pandemic. The big three national carriers – American, United and Delta Airlines – had $85 billion in net long-term debt at the end of the second quarter. (Graphic: https://tmsnrt.rs/3Rt2qpp)

Airlines need strong and sustained profits to reduce those debt loads, but rising fuel and labor costs are making that difficult, analysts say.

United Airlines’ wage and fuel expense as a percentage of revenue is up by 10 points this year versus 2019. In the first six months of 2022, the company spent 59% of its revenue on wage and fuel bills. American Airlines has had similar increases.

“These carriers have multi-year balance sheet repairs ahead of them,” said aviation analyst Robert Mann. “Job No. 1 is going to be using free cash flow to pay down those increased debt levels.”

Cost pressures are set to worsen as a pilot shortage at smaller, regional carriers means dramatic pay increases.

Mesa Air Group, which operates flights for American and United, last month raised pilot salaries by as much as 172%.

That came days after CommutAir, a regional carrier partially owned by United, increased pilot wages by up to 40%. The increases were in response to American’s decision in June to raise pilot salaries at regional affiliates by as much as 87%.(Graphic: https://tmsnrt.rs/3D18lOj)

The wage hikes have cost implications for the whole industry as it pressures rivals to offer similar increases.

National carriers are also expected to feel the pinch as regional partners look to pass along increased costs. Raymond James analysts estimate pay raises at regional airlines could increase non-fuel operating costs at national carriers by up to 3.3 percentage points.

Pilots at national carriers are also pushing for big wage increases.

United is renegotiating with its pilot union after some pilots expressed reservations with the last agreement that included a double-digit pay hike.

American’s offer for pay increases of about 17% as well as higher per diem and training pay through 2024 – estimated to cost the company more than $2 billion – has failed to find favor with pilots.

Labor costs were the industry’s biggest operating expense last year at about 35%. That figure is only down this year due to a run-up in fuel costs, but the hiring push is expected to inflate wage bills.

Meanwhile, costs are expected to remain high. United has projected a 2022 fuel bill $9 billion higher than in 2019.

PRICING POWER

Airlines have been relying on strong consumer demand and higher fares to mitigate inflationary pressure.

Investors are not sure carriers will have the same pricing power should consumer demand slow. And corporate travel – the industry’s cash cow – has yet to recover to pre-pandemic levels.

“There’s a big question about who’s going to be flying, how often they’re going to be flying and the price that they’re going to be willing to pay,” said Tim Ghriskey, senior portfolio strategist at investment advisory firm Ingalls & Snyder.

American and United on Wednesday played down demand concerns, saying there has been no slowdown in post-summer travel bookings.

American said it has surplus cash it plans to use for paying off debt. However, it is holding that cash due to economic uncertainty.

Investors also want the return of share buybacks and dividends. As part of the federal COVID-19 relief package, airlines have been prohibited from buying back their shares. That ban is set to expire this month.

Non-fuel cost pressures are expected to ease once carriers begin operating as many flights as they did before the pandemic.

Most airlines are planning to ramp up capacity next year. But Michael Wall, portfolio manager at investment management firm Westwood Group, warned that could backfire in a recession.

“Once the demand goes away, their pricing power goes away,” he said.

(Additional reporting by Allison Lampert in Montreal, editing by Ben Klayman and Bill Berkrot)

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By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) – The European Central Bank raised its key interest rates by an unprecedented 75 basis points on Thursday and signalled further hikes, prioritising the fight against inflation even as the bloc’s economy is heading for a likely winter recession.

With inflation at a half-century high and approaching double-digit territory, policymakers are worried that rapid price growth could become entrenched, eroding the value of household savings and setting off a wage-price spiral.

Following up on its July rate hike, the ECB raised its deposit rate to 0.75% from zero and lifted its main refinancing rate to 1.25%, their highest levels since 2011, with further moves anticipated in October and December.

“We have more journey to cover going forward,” ECB President Christine Lagarde told a news conference, adding that there had been unanimous agreement among policymakers about the need for a 75-basis point hike to “frontload” the move towards rates consistent with bringing inflation to its 2% mid-term target.

GRAPHICS:ECB monetary policy: https://graphics.reuters.com/GLOBAL-CENTRALBANKS/gkvlgnlyxpb/chart.png

Policymakers had for weeks oscillated between a 50 and a 75 basis-point increase, but another jump in both headline and underlying inflation appears to have settled the debate as figures indicate that price growth is now seeping into the broader economy, making it even harder to root out.

Indeed, the ECB raised its inflation projections once again, lifting the 2023 outlook to 5.5% from 3.5% and putting the 2024 rate at 2.3%, above its 2% target.

Markets were little surprised, however, as investors had already priced a more than 80% likelihood of a 75 basis-point move, even if economists polled by Reuters were more evenly split, showing only a slight majority expecting the larger move.

With the ECB statement explicitly saying more rate hikes would be needed, markets continue to expect another 50 basis points at the ECB’s October meeting.

Asked about the future direction and pace of rate changes, Lagarde said: “We didn’t say ‘raise at 75’ as if 75 is the norm – it is not.”

SERIOUS

Going into the meeting, conservatives feared that anything other than an outsized move would signal that the ECB was not serious about its inflation-fighting mandate – officially its sole objective.

That risked pushing up already high long-term inflation expectations, which would signal a loss of confidence in the ECB and raise questions about the bank’s inflation-targeting framework.

Timid action also risked weakening the euro and boosting inflation further through more expensive energy imports.

The euro has been languishing around parity against the dollar for weeks, not far from a two-decade low hit earlier this month.

That means more expensive exports of everything from oil to cars, which then raises prices for consumer.

Policymakers have also made the case for frontloading rate hikes partly to send a strong signal about the central bank’s inflation-fighting commitment and partly to get most of the hikes done before the onset of a recession becomes evident.

With high energy prices sapping purchasing power, a downturn is essentially inevitable. However, monetary policy is mostly powerless against a supply-shock driven downturn, firming the argument for hikes even if the economy suffers.

Some policymakers are now openly talking about a recession, and the ECB’s new projections also show sharply lower growth in the coming years.

Still, a shallow recession may even be useful, some argued, as the bloc’s labour market is increasingly tight and a downturn could provide relief to firms now struggling to find workers.

The bank sees the euro zone economy expanding by 3.1% this year and 0.9% in 2023. While this year’s growth projection was lifted a touch, it was lowered sharply for 2023.

However Lagarde said its so-called “downside” scenario – involving a total shutdown of Russian gas supply and policies including energy rationing – would plunge the euro area into a recession next year, with a 0.9% contraction foreseen.

(Editing by John Stonestreet, Tomasz Janowski and Hugh Lawson)

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By Yoruk Bahceli

(Reuters) -Euro zone government bond yields jumped on Thursday, after European Central Bank chief Christine Lagarde said that the bank would release a statement on how it remunerates government deposits.

That would come as part of the unprecedented 75 basis-point rate hike the ECB announced on Thursday, which brought its deposit rate to 0.75%.

The ECB also signalled further hikes, prioritising the fight against inflation even as the bloc’s economy is heading for a likely winter recession.

Germany’s two-year bond yield was up 16 bps to 1.26% by 1330 GMT, after touching the highest since June at 1.305%. The 10-year yield was up 10 bps to 1.67%.

Other two and 10-year bond yields across the bloc rose similarly. Currently, the ECB applies a 0% cap to the interest rate on government deposits since its July rate hike.

While referring journalists to a statement that would be released following her press conference, ECB chief Christine Lagarde said the rate would likely move up to the bank’s deposit rate of 0.75%. Analysts said without a change following Thursday’s rate hike, the 0% cap would have incentivized government debt offices to cut their cash balances at their central banks. That has put downward pressure on bond yields and widened swap spreads to levels not seen since the euro zone debt crisis in recent weeks. Analysts have also warned it could lead debt offices to take out more collateral, in the form of high quality debt, out of the market. This would exacerbate a shortage of such bonds after years of ECB asset-buying have reduced the free float available for investors.

Lyn Graham-Taylor, senior rates strategist at Rabobank, said that if the rate rises to 0.75% as Lagarde suggested, it would be a more generous a change than he had expected.

The initial details suggest the new measure would alleviate any concerns around further bond scarcity, Graham-Taylor said.

Euro zone bank stocks jumped as much as 2.4% to their highest level in more than two weeks before paring gains and trade up 0.9% by 1335 GMT. The broader euro zone stock market wavered before turning lower, last down 0.9%.

The euro extended losses during President Lagarde’s press conference and was last down 0.5% at $0.99625, but may have also been moved by a speech by U.S. Federal Reserve chair Jerome Powell.

(Reporting by Yoruk Bahceli; additional reporting by Danilo Masoni, Stefano Rebaudo, Samuel Indyk; Editing by Dhara Ranasinghe)

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LONDON (Reuters) – The European Central Bank on Thursday lifted its key interest rate by an unprecedented 75 basis points and signalled further hikes, the latest major central bank to prioritise taming inflation before a weakening economy.

Canada and Australia also lifted rates this week. Japan, which is yet to lift rates in this cycle, is the holdout dove among the 10 big developed economies.

In total, the following central banks have so far raised rates in this cycle by a combined 1,615 basis points.

Here’s a look at where policymakers stand in the race to contain inflation, from hawkish to dovish.

GRAPHIC: Fight against inflation https://graphics.reuters.com/GLOBAL-CENTRALBANKS/lgvdwdozzpo/chart.png

1) UNITED STATES

Traders anticipate an 84% chance the U.S. Federal Reserve will deliver a third consecutive 75 basis-point (bps) rate rise at its next meeting on Sept. 20-21.

Fed chief Jerome Powell has made clear that taming inflation is the central bank’s priority even if that comes at the expense of weaker economic growth.

GRAPHIC: Is U.S. inflation peaking? https://graphics.reuters.com/GLOBAL-MARKETS/THEMES/egpbkraxmvq/chart.png

2) CANADA

The Bank of Canada on Wednesday hiked interest rates by 75 bps to 3.35%, a 14-year high, and promised further tightening to battle inflation at a four-decade high.

In July, the BoC delivered the first 100-bps rate increase among the world’s advanced economies in the current policy-tightening cycle.

GRAPHIC: Canada goes big again to tame inflation https://graphics.reuters.com/CANADA-CENBANK/lbpgnkbxnvq/chart.png

3) NEW ZEALAND

The Reserve Bank of New Zealand last month delivered its seventh straight hike — and fourth consecutive rise of 50 bps — to lift rates to 3%, the highest since September 2015.

The RBNZ also struck a more hawkish tone. It now sees rates at 4% by early 2023, versus a previous projection of 3.7%, implying at least one more 50 bps rate hike at upcoming meetings.

GRAPHIC: New Zealand monetary policy https://graphics.reuters.com/NEWZEALAND-CENBANK/gdvzyxdzepw/chart.png

4) BRITAIN

The Bank of England is expected to hike again by as much as 75 bps when it meets next week. Last month, the BoE lifted its key rate by half a percentage point to 1.75% – its highest level since 2008.

It has warned that Britain faced a recession with a peak-to-trough fall in output of 2.1%. The prospect of soaring double-digit inflation has investors expecting rate hikes will not stop until around June 2023 with peaks near 4.4%.

GRAPHIC: Bank of England under pressure again https://graphics.reuters.com/GLOBAL-CENTRALBANKS/znvnewxnlpl/chart.png

5) NORWAY

Norway, the first big developed economy to kick off a rate-hiking cycle last year, last month raised rates another half a percentage point to 1.75% and said more hikes were likely, probably including one in September. The Norges Bank meets on Sept. 22.

GRAPHIC: Soaring inflation https://graphics.reuters.com/GLOBAL-CENTRALBANKS/akpezboxyvr/chart.png

6) AUSTRALIA

The Reserve Bank of Australia hiked by another 50 bps on Tuesday, for a fifth month running. But the central bank dropped a reference to “normalising” policy, suggesting rates were now closer to neutral, while flagging it had more work to do.

The RBA has delivered 225 bps of hikes since May, taking its key rate to a seven-year high of 2.35%.

GRAPHIC: RBA looks for a path back to inflation target https://graphics.reuters.com/GLOBAL-MARKETS/THEMES/myvmnzgjepr/chart.png

7) SWEDEN

A late-comer to the inflation battle, Sweden’s Riksbank delivered a 50 bps hike on June 30 to 0.75%, its largest in over 20 years.

The Riksbank has reversed its forecasts to keep rates unchanged until 2024 and now expects to hike to 2% in early 2023. Markets are fully pricing in a 75 bps move at the Sept. 20 meeting.

GRAPHIC: Sweden joins the rate race https://graphics.reuters.com/GLOBAL-CENTRALBANKS/xmpjoangnvr/chart.png

8) EURO ZONE

The ECB was late to the hiking game but is catching up fast.

Following up on its July rate hike, the ECB on Thursday raised its deposit rate to 0.75% from zero and lifted its main refinancing rate to 1.25%, their highest levels since 2011, with further moves anticipated in October and December.

The ECB also raised its inflation projections once again, lifting the 2023 outlook to 5.5% from 3.5% and putting the 2024 rate at 2.3%, above its 2% target.

GRAPHIC: ECB monetary policy https://graphics.reuters.com/GLOBAL-CENTRALBANKS/gkvlgnlyxpb/chart.png

9) SWITZERLAND

The Swiss National Bank (SNB) meets on Sept. 22 and has flagged further monetary tightening to contain inflation running well above the 0%-to-2% target range at 3.5%.

The SNB in June unexpectedly hiked rates by 50 bps. It is also prepared to let the Swiss franc strengthen to try to curb imported inflation, departing from its years-long stance of reining in the franc’s value and protect its export-reliant economy.

GRAPHIC: SNB’s price stability issue https://graphics.reuters.com/TEST-TEST/mopaneladva/chart.png

10) JAPAN

is the holdout dove. The Bank of Japan next meets on Sept 21-22 and will likely keep rates at an ultra-low -0.1%.

Although inflation has exceeded the Bank of Japan’s 2% target for several months, the BoJ is resolved to keep rates low to support a fragile economy.

GRAPHIC: The last dove https://graphics.reuters.com/TEST-TEST/xmvjoanonpr/chart.png

(Reporting by Tommy Reggiori Wilkes, Yoruk Bahceli, Samuel Indyk, Nell Mackenzie, Dhara Ranasinghe; Graphics by Vincent Flasseur and Sumanta Sen, Editing by Jonathan Oatis)

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