US 'Giant Step'... Middle East, Latin America, Asia Follow with Interest Rate Hikes

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), held a press conference on the 15th (local time) at the Fed headquarters in Washington DC after concluding the Federal Open Market Committee (FOMC) regular meeting. On this day, the Fed announced a 0.75 percentage point increase in the benchmark interest rate. [Image source=Yonhap News]

The U.S. Federal Reserve (Fed) took a 'giant step' by raising the benchmark interest rate by 0.75 percentage points at once amid steep inflation, and countries around the world, including those in the Middle East and South America, have also followed suit with interest rate hikes.

According to foreign media such as Bloomberg, the Central Bank of Brazil raised its benchmark interest rate by 0.5 percentage points to 13.25% on the 15th (local time). This marks the 11th consecutive rate hike. The benchmark rate, which was 2.0% in March last year, has risen by more than 11%, reaching its highest level since 2017.

With the Brazilian presidential election scheduled for October, President Jair Bolsonaro, who is seeking re-election, faces the urgent task of stabilizing the inflation rate, which reached 11.73%, making it inevitable to raise interest rates.

The Central Bank of Mexico is also considering a rate hike of about 0.75 percentage points ahead of its monetary policy meeting on the 23rd.

Middle Eastern oil-producing countries also raised interest rates following the Fed on the same day. Among the Gulf Cooperation Council (GCC) member countries, Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, and Bahrain raised their policy rates.

The UAE, Qatar, and Bahrain raised their benchmark interest rates by 0.75 percentage points, while Saudi Arabia increased its repurchase agreement (repo) and reverse repo rates by 0.5 percentage points each, bringing them to 2.25% and 1.75%, respectively.

Kuwait raised its lending rate by 0.25 percentage points to 2.25%, and Oman is also expected to raise rates soon.

In Europe, the United Kingdom is expected to raise its benchmark interest rate on the 16th. The market anticipates a 0.25 percentage point increase, though there is also a possibility of a 0.5 percentage point hike at once. If raised this time, it will be the fifth consecutive increase.

In Asia, Hong Kong raised its benchmark interest rate by 0.75 percentage points to 2% on the same day. Hong Kong, which operates a dollar peg system, has followed the Fed's moves and implemented its third rate hike this year.

Additionally, Taiwan raised its benchmark interest rate by 0.125 percentage points to 1.5%. This is the second rate hike this year.

This content was produced with the assistance of AI translation services.