In the past, monetary tightening policies usually took the form of key rate increases of +0.25% or +0.5%. On June 15 and then on July 27, the Fed proceeded with rate hikes of 0.75% described as exceptional by Jerome Powell, its president. In chronological order, the European Central Bank (ECB), the US Federal Reserve (Fed) and the Swiss National Bank (SNB) all took similar action this month by raising their key rates by 75 basis points. They have also adopted the same language by designating inflation as the scourge to be fought at all costs. The Fed was less nuanced than its counterparts in Europe which ended a decade of negative rates. If an aggressive monetary policy threatens to cause a recession accompanied by a deterioration in the job market, the American central bank will take responsibility for its actions. There is only one enemy: rising prices. There is only one enemy: a greater inflationary threat and in the coming months, the central banks will not hesitate to raise their key rates in stages of +0.75%.
