Global Tightening, February Update: (Shock-and-Awe) Rate Hikes by Many Central Banks to Tamp Down on Raging Inflation. Even the Fed & ECB Get in Line | Wolf Street

With a policy rate of 10.75%, and a December inflation rate of 10.1%, Brazil is one of a few countries were the policy rate is above the rate of inflation, and therefore in real terms no longer negative, and therefore no longer stimulating inflation. By contrast, the Fed is a quadrillion miles behind.

The Fed, on January 26, announced via Chair Powell at the FOMC press conference that it would hike its policy rate on March 16 and that it would start QT later this year. In November, it began tapering its asset purchases. It has since then accelerated the process of tapering and will end QE entirely in early March, just before liftoff.

But at the moment, the Fed’s target range for the federal funds rate is still 0% to 0.25%, and it is still doing QE even if at a much-reduced pace. Meanwhile, CPI inflation spiked to 7.04%, the worst since 1982. With the Effective Federal Funds Rate at 0.08%, the “real” EFFR (EFFR minus CPI) is now at -6.96%, the most negative and worst ever.

The Central Bank of Turkey has become part of a joke on how to destroy a currency as quickly as possible. Amid raging inflation – it hit 49% in January – the central bank has been cutting its policy rate to 14%, from 19% in mid-2021, after Erdogan fired the head of the central bank. Erdogan is now trying to control this inflation rampage by firing the head of the statistics agency.

Global Tightening, February Update: (Shock-and-Awe) Rate Hikes by Many Central Banks to Tamp Down on Raging Inflation. Even the Fed & ECB Get in Line | Wolf Street

Globally, until all banks get ahead of inflation with their official interest rate hikes, rampant inflation is here to stay.