Markets
Interest Rate Hikes vs. Inflation Rate, by Country
Interest Rate Hikes vs. Inflation Rate, by Country
Imagine todayโs high inflation like a car speeding down a hill. In order to slow it down, you need to hit the brakes. In this case, the โbrakesโ are interest rate hikes intended to slow spending. However, some central banks are hitting the brakes faster than others.
This graphic uses data from central banks and government websites to show how policy interest rates and inflation rates have changed since the start of the year. It was inspired by a chart created by Macrobond.
How Do Interest Rate Hikes Combat Inflation?
To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russiaโs invasion of Ukraine.
In an effort to combat inflation, central banks will raise their policy rate. This is the rate they charge commercial banks for loans or pay commercial banks for deposits. Commercial banks pass on a portion of these higher rates to their customers, which reduces the purchasing power of businesses and consumers. For example, it becomes more expensive to borrow money for a house or car.
Ultimately, interest rate hikes act to slow spending and encourage saving. This motivates companies to increase prices at a slower rate, or lower prices, to stimulate demand.
Rising Interest Rates and Inflation
With inflation rates hitting multi-decade highs in some countries, many central banks have announced interest rate hikes. Below, we show how the inflation rate and policy interest rate have changed for select countries and regions since January 2022. The jurisdictions are ordered from highest to lowest current inflation rate.
Jurisdiction | Jan 2022 Inflation | May 2022 Inflation | Jan 2022 Policy Rate | Jun 2022 Policy Rate |
---|---|---|---|---|
UK | 5.50% | 9.10% | 0.25% | 1.25% |
U.S. | 7.50% | 8.60% | 0.00%-0.25% | 1.50%-1.75% |
Euro Area | 5.10% | 8.10% | 0.00% | 0.00% |
Canada | 5.10% | 7.70% | 0.25% | 1.50% |
Sweden | 3.90% | 7.20% | 0.00% | 0.25% |
New Zealand | 5.90% | 6.90% | 0.75% | 2.00% |
Norway | 3.20% | 5.70% | 0.50% | 1.25% |
Australia | 3.50% | 5.10% | 0.10% | 0.85% |
Switzerland | 1.60% | 2.90% | -0.75% | -0.25% |
Japan | 0.50% | 2.50% | -0.10% | -0.10% |
The Euro area has 3 policy rates; the data above represents the main refinancing operations rate. Inflation data is as of May 2022 except for New Zealand and Australia, where the latest quarterly data is as of March 2022.
The U.S. Federal Reserve has been the most aggressive with its interest rate hikes. It has raised its policy rate by 1.5% since January, with half of that increase occurring at the June 2022 meeting. Jerome Powell, the Federal Reserve chair, said the committee would like to โdo a little more front-end loadingโ to bring policy rates to normal levels. The action comes as the U.S. faces its highest inflation rate in 40 years.
On the other hand, the European Union is experiencing inflation of 8.1% but has not yet raised its policy rate. The European Central Bank has, however, provided clear forward guidance. It intends to raise rates by 0.25% in July, by a possibly larger increment in September, and with gradual but sustained increases thereafter. Clear forward guidance is intended to help people make spending and investment decisions, and avoid surprises that could disrupt markets.
Pacing Interest Rate Hikes
Raising interest rates is a fine balancing act. If central banks raise rates too quickly, itโs like slamming the brakes on that car speeding downhill: the economy could come to a standstill. This occurred in the U.S. in the 1980โs when the Federal Reserve, led by Chair Paul Volcker, raised the policy rate to 20%. The economy went into a recession, though the aggressive monetary policy did eventually tame double digit inflation.
However, if rates are raised too slowly, inflation could gather enough momentum that it becomes difficult to stop. The longer high price increases linger, the more future inflation expectations build. This can result in people buying more in anticipation of prices rising further, perpetuating high demand.
“There’s always a risk of going too far or not going far enough, and it’s going to be a very difficult judgment to make.โ โ Jerome Powell, U.S. Federal Reserve Chair
Itโs worth noting that while central banks can influence demand through policy rates, this is only one side of the equation. Inflation is also being caused by supply chain issues, a problem that is more or less outside of the control of central banks.
Agriculture
Which Countries Produce the Most Wheat?
Global wheat production is concentrated in just a handful of countries. Hereโs a look at the top wheat-producing countries worldwide.

Visualizing Global Wheat Production by Country (2000-2020)
Wheat is a dietary staple for millions of people around the world.
After rice and corn (maize), wheat is the third most-produced cereal worldwide, and the second-most-produced for human consumption. And considering wheatโs importance in the global food system, any impact on major producers such as droughts, wars, or other events, can impact the entire world.
Which countries are the largest producers of wheat? This graphic by Kashish Rastogi visualizes the breakdown of 20 years of global wheat production by country.
Top 10 Wheat Producing Countries
While more than 80 different countries produce wheat around the world, the majority of global wheat production comes from just a handful of countries, according to data from The Food and Agriculture Organization of the United Nations (FAO).
Here’s a look at the top 10 wheat-producing countries worldwide, based on total yield in tonnes from 2000-2020:
Rank | Country | Continent | Total yield (tonnes, 2000-2020) | % of total (2000-2020) |
---|---|---|---|---|
#1 | ๐จ๐ณ China | Asia & Oceania | 2.4 B | 17.0% |
#2 | ๐ฎ๐ณ India | Asia & Oceania | 1.8 B | 12.5% |
#3 | ๐ท๐บ Russia | Asia & Oceania | 1.2 B | 8.4% |
#4 | ๐บ๐ธ U.S. | Americas | 1.2 B | 8.4% |
#5 | ๐ซ๐ท France | Europe | 767 M | 5.4% |
#6 | ๐จ๐ฆ Canada | Americas | 571 M | 4.0% |
#7 | ๐ฉ๐ช Germany | Europe | 491 M | 3.5% |
#8 | ๐ต๐ฐ Pakistan | Asia & Oceania | 482 M | 3.4% |
#9 | ๐ฆ๐บ Australia | Asia & Oceania | 456 M | 3.2% |
#10 | ๐บ๐ฆ Ukraine | Europe | 433 M | 3.1% |
China, the worldโs largest wheat producer, has yielded more than 2.4 billion tonnes of wheat over the last two decades, making up roughly 17% of total production from 2000-2020.
A majority of Chinaโs wheat is used domestically to help meet the countryโs rising food demand. China is the worldโs largest consumer of wheatโin 2020/2021, the country accounted for approximately 19% of global wheat consumption.
The second-largest wheat-producing country is India. Over the last two decades, India has produced 12.5% of the worldโs wheat. Like China, India keeps most of its wheat domestic because of significant food demand across the country.
Russia, the worldโs third-largest wheat producer, is also the largest global exporter of wheat. The country exported more than $7.3 billion worth of wheat in 2021, accounting for approximately 13.1% of total wheat exports that year.
Russia-Ukraine Impact on Global Wheat Market
Because Russia and Ukraine are both significant global wheat producers, the ongoing conflict between the two countries has caused massive disruptions to the global wheat market.
The conflict has had an impact on adjacent industries as well. For instance, Russia is one of the worldโs major fertilizer suppliers, and the conflict has led to a global fertilizer shortage which could lead to food shortages worldwide.
Markets
3 Reasons for the Fertilizer and Food Shortage
Bad weather, the war in Ukraine, and a shortage of fertilizer have led to fears of a global food crisis. Here are three factors you should know.

3 Reasons for the Fertilizer and Food Shortage
This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.
Bad weather, the Russian invasion of Ukraine, and a shortage of fertilizer have led to fears of a global food crisis.
This infographic will help you understand the problem by highlighting three key factors behind the mounting food crisis.
#1: The Fertilizer Shortage
Since the beginning of the Russian invasion of Ukraine in February 2022, the war has disrupted shipments of fertilizer, an essential source of nutrients for crops.
Russia is the world’s top exporter of nitrogen fertilizer and ranks second in phosphorus and potassium fertilizer exports. Belarus, a Russian ally also contending with Western sanctions, is another major fertilizer producer. In addition, both countries collectively account for over 40% of global exports of the crop nutrient potash.
Here are the top 20 fertilizer exporters globally:
Rank | Country | Exports Value (Billions in USD) |
---|---|---|
#1 | ๐ท๐บ Russia | $12.5 |
#2 | ๐จ๐ณ China | $10.9 |
#3 | ๐จ๐ฆ Canada | $6.6 |
#4 | ๐ฒ๐ฆ Morocco | $5.7 |
#5 | ๐บ๐ธ United States | $4.1 |
#6 | ๐ธ๐ฆ Saudi Arabia | $3.6 |
#7 | ๐ณ๐ฑ Netherlands | $2.9 |
#8 | ๐ง๐ช Belgium | $2.6 |
#9 | ๐ด๐ฒ Oman | $2.6 |
#10 | ๐ถ๐ฆ Qatar | $2.2 |
#11 | ๐ฉ๐ช Germany | $1.5 |
#12 | ๐ฎ๐ฑI srael | $1.5 |
#13 | ๐ช๐ฌ Egypt | $1.5 |
#14 | ๐ฑ๐น Lithuania | $1.4 |
#15 | ๐ฉ๐ฟ Algeria | $1.4 |
#16 | ๐ช๐ธ Spain | $1.3 |
#17 | ๐ฏ๐ด Jordan | $1.3 |
#18 | ๐ต๐ฑ Poland | $1.2 |
#19 | ๐ฒ๐พ Malaysia | $1.0 |
#20 | ๐ณ๐ฌ Nigeria | $1.0 |
The main destination of fertilizer exports from Russia are large economies like India, Brazil, China, and the United States.
However, many developing countriesโincluding Mongolia, Honduras, Cameroon, Ghana, Senegal, and Guatemalaโrely on Russia for at least one-fifth of their fertilizer imports.
Furthermore, the war intensified trends that were already disrupting supply, such as increased hoarding by major producing nations like China and sharp jumps in the price of natural gas, a key feedstock for fertilizer production.
#2: Global Grain Exports
The blockade of Ukrainian ports by Russiaโs Black Sea fleet, along with Western sanctions against Russia, has worsened global supply chain bottlenecks, causing inflation in food and energy prices around the world.
This is largely because Russia and Ukraine together account for nearly one-thirdย of the global wheat supply. Wheat is one of the most-used crops in the world annually, used to make a variety of food products like bread and pasta. Additionally, Ukraine is also a major exporter of corn, barley, sunflower oil, and rapeseed oil.
Producer | Grain Exports in Million Tons (MT) |
---|---|
๐บ๐ธ United States | 93MT |
๐ท๐บ Russia & ๐บ๐ฆ Ukraine | 87MT |
๐ฆ๐ท Argentina | 56MT |
๐ช๐บ EU | 50MT |
๐ง๐ท Brazil | 44MT |
Other | 87MT |
As a result of the blockade, Ukraine’s exports of cereals and oilseed dropped from six million tonnes to two million tonnes per month. After two months of negotiations, the two countries signed a deal to reopen Ukrainian Black Sea ports for grain exports, raising hopes that the international food crisis can be eased.
#3: Recent Food Shortages
Besides the war in Ukraine, factors including the COVID-19 pandemic and climate change resulted in nearly one billion people going hungry last year, according to United Nations.
Franceโs wine industry saw its smallest harvest since 1957 in 2021, with an estimated loss of $2 billion in sales due to increasingly higher temperatures and extreme weather conditions.
Heat, drought, and floods also decimated crops in Latin America, North America, and India in recent months. Between April 2020 and December 2021, coffee prices increased 70% after droughts and frost destroyed crops in Brazil.
In the face of multiple crises, the World Bank recently announced financial support of up to $30 billion to existing and new projects in areas such as agriculture, nutrition, social protection, water, and irrigation.
-
Markets4 weeks ago
The $100 Trillion Global Economy in One Chart
-
Demographics3 weeks ago
Ranked: The 20 Countries With the Fastest Declining Populations
-
Investor Education4 weeks ago
Countries with the Highest Default Risk in 2022
-
Energy2 weeks ago
Visualizing the World’s Largest Oil Producers
-
Misc4 days ago
Visualizing Which Countries Drink the Most Beer
-
Personal Finance1 week ago
Mapped: The Salary You Need to Buy a Home in 50 U.S. Cities
-
Agriculture2 weeks ago
Timeline: The Domestication of Animals
-
Energy4 days ago
Which Countries Produce the Most Natural Gas?