Rates were increased a record 80 times in the first six months of 2022, a tabulation by Nikkei shows. Of those, emerging countries accounted for 60 times.

Central banks are acting quickly and in lockstep. When the pandemic hit in 2020, countries all responded with rate cuts to support their economies.

Now supply chain snarls caused by the pandemic and Russia’s invasion of Ukraine are fueling price increases, again forcing the hands of central banks.

The repercussions are also becoming evident. Money that flowed into stocks and other risk assets under easy money policy is now fleeing to safer vehicles, threatening the economic outlook.

The 80 rounds of interest hikes in the first half this year are about seven times more than in the same period of the previous year.

The number is higher than 56 times in 2011, when inflation was rising mainly in Asia, and 65 times in 2006, when the economy was booming before the Lehman shock.

Nikkei compiled the data using interest rate trends in 38 countries and regions published by the Bank for International Settlements, as well as recent announcements by central banks.

Interest rate cuts have been limited to China, where Covid-19-related lockdowns are making the economic outlook uncertain, and Russia, where Western economic sanctions are weighing on the economy.

Although data from emerging economies before 2000 is limited, this is likely to be the first worldwide tightening phase since the oil crises of the 1970s and 1980s. The number could approach the 119 hikes in the boom year of 2006.

Developed countries raised interest rates 20 times from January to June, the most since 28 times in the first half of 2006. The US Federal Reserve shifted to interest rate increases in March and raised rates by 75 basis points this week, the highest increase since 1994.

The Bank of England decided to raise interest rates at all of its meetings this year, bringing its policy rate to 1.25% in June. The European Central Bank is expected to raise interest rates in July for the first time in 11 years.

Emerging economies are tightening at a much faster pace than in 2008, when 50 rate hikes marked a record. They are acting quickly because rapid rate hikes in the US will strengthen the dollar against emerging market currencies.

A weak home currency accelerates inflation by raising import prices.

“The macroeconomic climate is challenging,” said Yukiko Hanai of T Rowe Price. Malaysia raised interest rates for the first time in four years and four months in May as the ringgit depreciated against the dollar.

Japan has not joined this global trend, and the yen will continue to face downward pressure because of the interest rate gaps with other economies.

Global monetary tightening is reversing the flow of risk money. Compared with the end of 2021, the Dow Jones Industrial Average and the European stock indexes are down more than 17%.

The decline has picked up pace this week, with the drop reaching nearly 5%. The S&P 500 was down about 6% for the week.

The index tracking junk bonds, which had been supported by easing money, and the Bloomberg index on emerging market debt are both down.

According to US research firm EPFR, US$57 billion flowed out of emerging market sovereign bond funds from the beginning of the year to May.

“Investors are trying to reduce their holdings of risk assets as much as possible by increasing their cash ratios, but it’s difficult because they cannot put everything into cash,” said Norihiro Fujito of Mitsubishi UFJ Morgan Stanley Securities.

Beyond the current market turmoil, a possible recession is on the horizon. More than 60% of CEOs expect the economy to enter a recession within 18 months, according to a survey of global CEOs and executives released Friday by The Conference Board.

In May, the Purchasing Manager’s Index for manufacturing was in the 55 range for advanced economies, above the boom-or-bust 50 mark. But the index has been below 50 for three consecutive months in emerging markets, due in part to China’s lockdowns.

The market increasingly believes that “the Fed and others central banks will try to contain inflation at the expense of the economy”, said Kenji Yamamoto of Daiwa Securities.

The challenge for central banks is to keep inflation under control without causing the global economy to buckle.