In what can only be described as a coordinated game of financial hot potato, central banks worldwide have simultaneously discovered that the solution to runaway inflation is to make borrowing so expensive that nobody can afford to borrow anything. Brilliant strategy. Japan, apparently deciding that 31 years of rate stability was boring, just hit its highest interest rate since 1995—a move that surely will not cause any unexpected consequences in a country famous for its delicate economic balance. Meanwhile, the US Federal Reserve raised rates for the first time in three years, doing so unanimously and with the kind of confidence you’d expect from a group that just ignored the President’s explicit demand to cut them instead. Nothing says “we have a plan” like telling the guy with the nuclear football that you are going in the opposite direction.
The Bank of England, not wanting to miss out on the fun, is reportedly “facing tough choices” about whether to join the rate-hiking party by year’s end. Translation: they are pretending to think about it while everyone knows they will probably do it anyway. The official reason, across all three institutions, is that energy prices are pushing inflation higher, and the only logical response to expensive energy is to make money itself expensive. It is economics as performance art—a beautiful, circular argument where central banks prove they are in control by making decisions that nobody predicted, while simultaneously insisting they had no choice.
Meanwhile, your mortgage, your car loan, and your credit card are all watching these moves like hawks, ready to pass every single basis point of pain directly to your monthly payment. The game continues. The rules remain mysterious. Everyone pretends to know what happens next.