Countries around the world, despite having different political regimes and economic conditions, are mostly using the same playbook to fight inflation—their central banks have been raising interest rates.
The Bank of England raised its benchmark interest rate 25 basis points to a 14-year high of 4.25% on Thursday, following in the footsteps of the U.S. Federal Reserve’s own 25-basis-point bump the day before.
Rate hikes, which increase borrowing costs for many kinds of loans, are meant to slow economies down, reduce demand for goods and services, and allow supply and demand to rebalance, settling price increases down. Central banks around the world are using similar strategies to combat punishing cost-of-living increases. The chart below shows which major economies’ central banks have raised rates and by how much.
One notable exception is Turkey (not shown on the chart), which, against conventional economic wisdom, has been cutting interest rates in the face of inflation that topped 85% in October.