Central banks are divided – so prepare for more turbulence

Central banks no longer agree on interest rates. The US is raising aggressively, while the UK is taking a more cautious approach and Japan is sticking to its plan of “yield curve control”. John Stepek explains why this matters, and what it means for the markets and your money.

Andrew Bailey, governor of the Bank of England
The Bank of England is in a major quandary
(Image credit: © Hollie Adams/Bloomberg via Getty Images)

Earlier this week, the Federal Reserve raised interest rates by three quarters of a percentage point. (That’s 75 basis points, or bps, in the financial jargon – so now you know what that particular acronym means).

That wasn’t a surprise for markets, but only because the surprise had been sprung a couple of days earlier, when inflation hit a new 40-year high and markets were primed – via well-connected journos – to expect a big rise rather than just half a point.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.