The ECB may not be done with monetary tightening. From Bloomberg:
The European Central Bank said it will act in a timely manner to keep "upside" inflation risks at bay, suggesting the bank may raise interest rates once volatility subsides on financial markets.
"The medium-term outlook for price stability remains subject to upside risks," the Frankfurt-based ECB said in its monthly bulletin published today. "By acting in a firm and timely manner, the governing council will ensure that risks to price stability over the medium term do not materialize."
Other central banks are not waiting.
The Swiss central bank raised its benchmark interest rate for the eighth time since late 2005 to head off inflation even as rising credit costs threaten to weigh on economic growth.
The Swiss National Bank's governing board, led by Jean- Pierre Roth, increased the 3-month Libor target rate by a quarter-point today to 2.75 percent, the highest since September 2001...
Chile's central bank raised its overnight lending rate for the third time since July at its monthly meeting, seeking to tame inflation driven by food prices.
Policy makers lifted the benchmark rate today by a quarter percentage point to 5.75 percent, matching the expectations of 24 out of 25 economists surveyed by Bloomberg. Rising costs for wheat and dairy helped push Chilean consumer prices up 4.7 percent in August from a year earlier.
But Turkey's central bank went in the opposite direction. Bloomberg reports
Turkey's central bank unexpectedly lowered its benchmark interest rate by a quarter point, the first cut for more than a year, on expectations a global economic slowdown will help ease pressure on inflation.
The Ankara-based bank reduced its overnight borrowing rate to 17.25 percent, according to an e-mailed statement today...
But then, Turkey is an unusual case with a real interest rate of about 10 percent.
For other central banks, an easing in the commercial paper market slump might just be the catalyst for more rate hikes. This Bloomberg report suggests there is a chance that such an easing may be coming:
The decline in the U.S. commercial paper market slowed last week, prompting speculation that the worst of the short-term credit rout may be over.
U.S. stocks rose and Treasuries fell after the Federal Reserve reported short-term debt dropped by $8.2 billion, compared with a decline of $54.1 billion a week earlier. That coincided with Countrywide Financial Corp. obtaining new financing and banks finding buyers for loans to fund Kohlberg Kravis Roberts & Co.'s buyout of Alliance Boots.