Rate hikes force revised outlook for credit

With the US calling a halt to interest rate tightening but other central banks continuing to raise rates, market participants have had to reassess their views on credit

The effects of global rates on credit came into play last month with key decisions in the US, European and UK markets. A round of 17 successive rate rises by the Fed came to an end on August 8 when the Federal Open Market Committee decided to keep levels stable at 5.25%. In the UK, the Bank of England surprised the market with a 25bp hike to 4.75%, which was followed by a similar notch-up by the European Central Bank (ECB) to 3%. In July, Japan's era of almost zero rates were punctuated with a