Following the U.S. Fed's biggest rate hike since 1994 on Wednesday, which brought oil prices down 1%, central banks across Europe on Thursday raised interest rates by record amounts in an effort to rein in inflation as energy prices soar.
The biggest shocks came from the Swiss National Bank and the National Bank of Hungary.
The Swiss National Bank made its first interest rate hike since 2007, increasing rates by 50 basis points, from -0.75% to -0.25%, sending the Swiss franc surging higher.
"We came to a conclusion that it is now better to increase interest rates by 50 basis points and not by 25 points in order to make an initial first step, in order to really also signal that we are fighting inflation so that it will also, over the medium-term, be in the range of price stability," CNBC quoted the bank as saying.
In Hungary, the central bank raised its one-week deposit rate by 50 basis points, catching the market by surprise.
The Bank of England also raised rates for the fifth time on Thursday, increasing them by 25 basis points to 1.25%, noting that the bank would "take the actions necessary to return inflation to the 2% target sustainably in the medium term", CNBC reported.
On Wednesday, the European Central Bank paved the way for rate hikes in July and September.
"We are in a new era for central banks, where lowering inflation is their only objective, even at the expense of financial stability and growth," George Lagarias, Chief Economist at Mazars Wealth Management said, as reported by Reuters.
Inflation across Europe has been caused by soaring oil and gas prices, which surged another 24% on Thursday after Russia further curbed gas flows to the European Union through the Nord Stream 1 pipeline, citing technical issues.
By Charles Kennedy for Oilprice.com
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