The Inflation Battle Rages On
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The Inflation Battle Rages On

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Central banks are engaged in a rough and tumble war against elevated inflation. Emerging markets entered the battle first with tighter monetary policy, and advanced/mature economies soon followed. While global inflation gauges appear to have peaked, they remain sticky, and it is not clear when key measures of consumer price inflation will fall back to their respective targets. Hence, central banks continue to tighten.

While central banks may ultimately achieve their goal of vanquishing inflation, to do so may mean keeping interest rates higher than recent decades’ norms. There is also the risk that policymakers will struggle to maintain those targets unless corporations and governments work together to lean against current and future structural drivers of inflation.

Central banks are engaged in a rough and tumble war against elevated inflation. Emerging markets entered the battle first with tighter monetary policy, and advanced/mature economies soon followed. While global inflation gauges appear to have peaked, they remain sticky, and it is not clear when key measures of consumer price inflation will fall back to their respective targets. Hence, central banks continue to tighten.

While central banks may ultimately achieve their goal of vanquishing inflation, to do so may mean keeping interest rates higher than recent decades’ norms. There is also the risk that policymakers will struggle to maintain those targets unless corporations and governments work together to lean against current and future structural drivers of inflation.

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