This is not a choice for policymakers, the IMF insists.

What is more, it won't be central banks that drive this dynamic. Yet in its latest World Economic Outlook, the IMF raises an interesting prospect: that though inflation is subsiding more slowly than anticipated, necessitating higher interest rates for longer, eventually rates will return to the near zero levels that ruled between the financial crisis and the end of the pandemic. I've been as critical as any of the clowns of central banking, so I'm not about to start defending them now. Their main task is to contain inflation, yet they failed to see it coming with the force it did, and even when it was blindingly obvious, they lightly dismissed it as a passing squall that would soon subside.īelatedly realising their mistake, they then rammed on the brakes, only to endanger their other main objective – the maintenance of financial stability.Īfter more than a decade of gorging on near free money, the speed and magnitude of the monetary tightening was a major shock which has already caused a series of mini-financial crises and bank runs. The most plausible answer is a cocktail of all these things, but that hasn't stopped a sometimes vindictive blame game, with particular opprobrium reserved for the world's major central banks. Was it the disruptions of the pandemic? Or was it Putin's murderous invasion of Ukraine and the accompanying energy price shock? Or was it simply central bank complacency, excessive money printing, extreme pandemic and energy crisis related spending, and the reckless abandon of Joe Biden's fiscal expansionism? So too is the International Monetary Fund, which in its latest musings on the world economy admits that there is much to be confused about.Įven the underlying causes of today's inflationary spike are hotly disputed. If feeling confused about the outlook for inflation, interest rates and growth, you are not alone.

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