REFLECTIONS

Where the Fed Goes, Other Central Banks May Not Follow

Mar 16, 2017 | 23:40 GMT

After Federal Reserve Board Chair Janet Yellen announced a hike in the U.S. benchmark lending rate March 15, the People's Bank of China bumped its rate up as well. But other major central banks declined to follow suit.

After Federal Reserve Board Chair Janet Yellen announced a hike in the U.S. benchmark lending rate March 15, the People's Bank of China bumped its rate up as well. But other major central banks declined to follow suit.

(BRENDAN SMIALOWSKI/AFP/Getty Images)

It has been a busy couple of days for the world's central banks. Since the U.S. Federal Reserve made its decision to hike interest rates, rate announcements have followed from the People's Bank of China, the Bank of Japan, the Swiss National Bank and the Bank of England. Below the surface of those central banks' moves on interest rates, or lack thereof, lurks the question of inflation. Controlling prices is the sole mission of almost every major central bank (the Fed has a dual mandate that also includes managing unemployment), so inflation numbers are the true drivers that shape monetary policy over time. Following several years in which central banks had to battle deflation, inflation has returned to the developed world over the past 12 months, and this has changed the tendency among central banks from further monetary easing to tightening....

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