Now that markets have finally been conditioned for interest-rate hikes, the danger of financial over-tightening looms large. Just as central bankers have embarked on a long-overdue process of balance-sheet unwinding, global developments have pushed the economy to the edge of recession.
NEW YORK – With prices in many advanced economies surging, central banks are being roundly criticized for falling “behind the curve” on inflation. But they didn’t. Government policies and geopolitics constrained central bankers from normalizing their monetary policies until inflation was already upon them. Chinese and Russian supply-chain disruptions collided with the synthetic demand created by the US Department of the Treasury mailing free money to American consumers.
NEW YORK – With prices in many advanced economies surging, central banks are being roundly criticized for falling “behind the curve” on inflation. But they didn’t. Government policies and geopolitics constrained central bankers from normalizing their monetary policies until inflation was already upon them. Chinese and Russian supply-chain disruptions collided with the synthetic demand created by the US Department of the Treasury mailing free money to American consumers.