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2022-01-11

Central banks’ resolve will be tested if policy-rate hikes lead to shocks

 in the bond, credit, and stock markets. With such a massive build-up of private and public debt, markets may not be able to digest higher borrowing costs. 

If there is a tantrum, central banks would find themselves in a debt trap and probably would reverse course. That would make an upward shift in inflation expectations likely, with inflation becoming endemic.

Nouriel Roubini Project Syndicate December 2021

https://www.project-syndicate.org/commentary/economic-market-outlook-2022-by-nouriel-roubini-2021-12

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