Strap in for a mega interest hike

Central banks have given fair warning. Now it’s time to get serious. 

Ready, set… 

The Fed has had enough of inflation. The incremental approach to rate hikes hasn’t been able to get inflation under control, so now it’s time to take drastic action. With inflation now getting up to 9.1%, it looks like a full percentage point hike is on the cards.  

And it’s not just the Fed being forced into playing its hand. The Bank of Canada has also pushed interest rates up by a full percentage point, with the Bank of England seemingly setting the ground for a similar hike. The ECB? Well, it’s still at negative rates. Handy.  

Breaking new ground 

A one-point hike is unprecedented in recent times, but it seems now almost inevitable that rate-setters are being pushed into radical action. So inevitable, in fact, that data from CME Group shows that traders believe there’s an 81% chance of it happening. With monetary tightening the order of the day, what steps do you need to take today to keep ahead of the curve?  

Here’s what you need to know. On the one hand, better interest rates are good news for savers. But if you’re paying down some kind of loan – tracker or variable mortgages, for example – you could find yourself having to pay out a lot more. Rising interest is a signal from the Fed to start stowing money away for a rainy day, because the heavy clouds are already forming.