Central banks of major economies around the world are undertaking the fastest rate hiking cycle seen since the early 1990s to tame the record-high inflation.

The global economy failing to fully recover from the coronavirus pandemic, persisting supply chain disruptions, the global chip crisis, soaring energy and food prices, and Russia's war on Ukraine have all contributed to the inflation in major economies reaching the highest level since the 1970s.

Central banks, in response, have initiated a strict monetary tightening policy and begun aggressively raising their interest rates to lower the money supply, which climbed to an all-time high during the pandemic when the world was in lockdown.

After the annual consumer inflation climbed to 8.6% in May, the U.S. Federal Reserve on Wednesday made a rate hike of 75 points, its steepest in 28 years, after raising the rates 50 basis points in May and 25 points in March.

Fed Chair Jerome Powell said after the Fed's meeting that another 75 basis points of a rate hike is on the table for the central bank's next meeting on July 27.

The Federal Open Market Committee said in its statement that it anticipates "ongoing increases in the target range will be appropriate."

Minneapolis Fed President Neel Kashkari signaled Friday he could also support another 75 basis point hike at the bank's meeting next month.

Europe

After the Fed, the Swiss National Bank (SNB) on Thursday also made a rate hike of 50 basis points, carrying its interest rate to minus 0.25%, from minus 0.75%.

"The tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland. It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilize inflation in the range consistent with price stability over the medium term," it said in a statement.

Later Thursday, the Bank of England (BoE) raised interest rates by 25 basis points, carrying it to 1.25%, from 1%. This marked the fifth straight rate hike for the central bank.

The BoE said it estimates consumer inflation to average slightly more than 10% when it peaks in the fourth quarter of this year.

"Global inflationary pressures have remained elevated and oil prices have risen further," the bank said in its monetary policy statement, adding: "The risks to the inflation projection were judged to be skewed to the upside at these points."

Although the European Central Bank (ECB) has not made a rate hike yet, it signaled last week that interest rate increases would begin next month.

The ECB's Governing Council plans to raise the key interest rates by 25 basis points at the July meeting, while some economists expect 50 basis points of hikes from the bank in the remaining three meetings this year.

The ECB also revised up its inflation forecast to 6.8% for this year, from its previous projection of 5.1% made in March, and also lowered its economic growth expectation to 2.8% for 2022, down from its previous estimate of 3.7%.

Other economies

On Wednesday, Brazil's central bank made a rate hike of 50 basis points, raising its benchmark interest rate to 13.25%, up from 12.75%, and signaled that more rate hikes are on the way.

"The global environment has deteriorated further, marked by downward revisions on prospective global growth in an environment of strong and persistent inflationary pressures," it said in a statement.

Inflation in Brazil is expected to come in at 8.8% in 2022 and 4% in 2023, according to the bank's monetary policy committee.

Ukraine sharply raised its interest rate to 25% from 10% on June 2, tightening its monetary policy for the first time since Russia launched a war on the country on Feb. 24.

The National Bank of Ukraine said in its statement that a rise in the key policy rate will spur investors' interest in the country's national currency and assets, while also reining in inflation.

The Bank of Canada on June 1 raised its policy interest rate by 50 basis points, and said inflation in the world and Canada is largely driven by higher prices for energy and food, adding: "The increase in global inflation is occurring as the global economy slows."

The bank said Russia's war on Ukraine, China's coronavirus-related lockdowns and ongoing supply disruptions are all factors boosting the inflation, while the war has increased uncertainty and is putting additional upward pressure on prices for energy and agricultural commodities.

Annual consumer inflation in Canada reached 6.8% in April.

Central banks of Australia, India, South Korea, Mexico, Poland and South Africa all have raised interest rates and begun monetary tightening in recent months.

Russia

There are, however, exceptions such as the Russian central bank that lowers interest rates, and both macroeconomic indicators and the value of the ruble have been improving in the country since the start of the war.

The Russian central bank on May 26 announced it has cut its key interest rate by 300 basis points to 11%, from 14%.

"Inflationary pressure eases on the back of the ruble exchange rate dynamics as well as the noticeable decline in inflation expectations of households and businesses," the Bank of Russia said in a statement.

Annual inflation in Russia reached 17.8% in April, but the bank said it forecasts annual inflation declining to a range of 5% to 7% in 2023 and further falling to 4% in 2024./aa