- Rising bond yields are weighing on the economy
- But energy price fears could trigger further tightening
After September’s central bank meetings, it looked as though interest rates had finally peaked. But since then, a lot has changed.
Yields on 10-year government bonds have surged by around half a percentage point, tightening financial conditions. With the impact of higher policy rates only just starting to feed through to the economy, further hikes now carry the very real risk of ‘overtightening’.