Central banks are not going to be able to control inflation without inflicting considerable pain on the economy
How surreally low rates have become that a rise of a “heady” 0.25 percentage points to the terrifying heights of 0.5pc should be thought worthy of comment at all.
Ever since the financial crisis, almost any rise in rates has been a major event. Indeed, there have only been four such increases in the past 15 years, and nearly all of them were quickly reversed.
ECB still clings stubbornly to the “transitory” narrative, but that says more about its own particular challenge of providing life support for an unstable euro than it does the reality of the inflationary experience; almost any tightening risks reigniting the eurozone debt crisis of a decade ago.
Charles Goodhart and Manoj Pradhan in their book, The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival
https://www.amazon.com/Great-Demographic-Reversal-Societies-Inequality/dp/3030426564
It means that central banks are not going to be able to control inflation without inflicting considerable pain on the economy. Keeping inflation at 2pc might require interest rates so high that it creates a kind of perma-recession.
Jeremy Warner Telegraph 2 February 2022
Kommentarer