The Federal Reserve (Fed) on Wednesday raised its key interest rate by three-quarters of a percentage point and forecast it will go even higher to combat soaring inflation. However, the central bank signalled it may be nearing a turning point in rate increases in what has become the steepest tightening in the US since the early 1980s.

Close on the heels of the Fed’s move, the Bank of England on Thursday also raised interest rates by three-quarters of a percentage point to three per cent – the biggest hike in over 30 years. It also forecasts that the UK is facing a “very challenging” two-year recession – which would be the longest on record.

Through these measures, the central banks are trying to bring multi-decade-high inflation rates in their home countries under control.

Meanwhile, Bank of England data suggests that the number of mortgage approvals made to homebuyers fell significantly in September as a result of increased borrower costs.

Mortgage approvals for house purchases fell to 66,800 from 74,400 the prior month following recent interest rates hikes targeting multi-decade-high inflation and the negative effects of the mini-budget, according to analysts. “September’s money and credit figures point to further signs that consumers have become more cautious in response to the weakening economic outlook,” said Ashley Webb, UK economist at consultancy Capital Economics.

Finally, a surprising jump in consumer prices in the eurozone indicates that inflation dug itself deeper across the currency bloc despite slowing growth.

Eurozone headline and core inflation surprised remarkably on the upside, rising to new all-time-highs of 10.7 per cent and five per cent year-on-year respectively in October, flash data from Eurostat showed on Monday. Headline inflation rose from 9.9 per cent, above the consensus estimate of 10.3 per cent. Core inflation rose from 4.8 per cent to five per cent year-on-year, in line with consensus.

The European Central Bank, with a mandate to keep inflation in the eurozone close to two per cent, over the summer reversed the decade-long trend of negative interest rates in a bid to curb price increases.

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