Why some central banks are rushing to hike rates now | CNN Business

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Central bankers across the globe are delivering a message: Slow and steady won’t win the race against inflation.

“If we don’t raise rates now, high inflation can stay with us for longer,” Bank of England Governor Andrew Bailey said after raising interest rates unexpectedly by half a percentage point on Thursday. Even though inflation is slowing in many countries after more than a year of interest rate hikes, it remains above the 2% level many central banks are targeting. Raising interest rates is the primary tool central bankers have at their disposal to get inflation down.

The plane needs to climb high enough to reach its destination – but not so high as to exceed it.” “The airplane is still climbing – and it will keep going until we have enough speed to glide sustainably and land at our destination,” Lagarde said two weeks before the ECB hiked interest rates by a quarter of a percentage point. Consumer prices in the 20 countries that use the euro rose 6.1% in May, easing from 7% one month prior.

 

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