Central banks may not aim for such an outcome but will probably adjust interest rate decisions in a way that makes it more likely than deep recession
istening to central bankers, one would think that the recent bout of high inflation was merely an excusable post-pandemic forecasting error made under extreme uncertainty. But while this narrative now prevails in markets and the financial press, it presumes a level of central-bank independence that is simply unrealistic in today’s volatile economic and political environment.
Economists who drink central banks’ inflation-targeting Kool-Aid and view existing arrangements as sacrosanct fail to recognise that the belief that central-bank independence can help control inflation is barelyin monetary policy, their proposed solution – simply instructing central banks to follow specific guidelines – was rather naive.
Despite being well known to economists, this inflationary bias has not been recognised by financial markets Despite being well known to economists, this inflationary bias has not been recognised by financial markets, perhaps because central-bank messaging has become exceptionally effective over the past few decades. Central bankers understand that as soon as markets doubt their intentions, interest rates will quickly reflect rising inflation expectations.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
A-League semi-final LIVE: Central Coast Mariners v Sydney FC at Central Coast StadiumThe Sky Blues are up against it as they try to turn around a 2-1 deficit from the first leg against a Mariners side closing in on a unique treble. Follow all the action as they battle it out for a place in the grand final.
Read more »
A-League semi-final LIVE: Central Coast Mariners v Sydney FC at Central Coast StadiumThe Sky Blues are up against it as they try to turn around a 2-1 deficit from the first leg against a Mariners side closing in on a unique treble. Follow all the action as they battle it out for a place in the grand final.
Read more »
Numbers game: why rankings matter in tennis – and why they can distractFor Tsitsipas they are a motivation, for Keys a joyless diversion, but in an age of live updates they loom large for all players
Read more »
Why Biden wanted to debate Trump early, and why Trump said yesBiden’s advisers have long believed that the dawning realisation of a Trump-Biden rematch will be a balm for the president’s droopy approval ratings.
Read more »
Why Biden wanted to debate Trump early, and why Trump said yesBiden’s advisers have long believed that the dawning realisation of a Trump-Biden rematch will be a balm for the president’s droopy approval ratings.
Read more »
Why Biden wanted to debate Trump early, and why Trump said yesBiden’s advisers have long believed that the dawning realisation of a Trump-Biden rematch will be a balm for the president’s droopy approval ratings.
Read more »