Atlas Macro

Central banks

Hiking Cycle

A period during which a central bank steadily raises its policy rate to combat inflation or cool the economy.

Key points

  • Typically tightens financial conditions and lifts real yields.
  • Can strengthen the domestic currency and pressure risk assets.
  • Ends when inflation slows or growth weakens meaningfully.

Example

The Fed raised rates by 75 bp in June, July, September and November 2022, its first moves of that size since 1994, to fight 9% inflation.

In history

From March 2022 to July 2023 the Fed raised rates 11 times, from near zero to 5.25-5.5%, the fastest tightening since the early 1980s.

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