Interest Rate Shock 2022

About Interest Rate Shock 2022

Central banks worldwide raised interest rates aggressively in 2022 to combat inflation. The US Federal Reserve raised rates from 0.25 to 4.5 percent, the fastest tightening cycle since the 1980s. Bond markets suffered their worst losses in centuries. UK pension funds were nearly wiped out by liability driven investment losses. The dollar soared against all currencies. Technology stocks plunged. The rapid rate increases ended the era of free money that had prevailed since 2008. Higher rates exposed vulnerabilities, including the banking crises of 2023. Inflation proved harder to control than expected, driven by supply chain disruptions and energy costs.