10/27/2022 – Due to misjudgments of the inflation trend and a delayed reaction to inflation dynamics, central banks are now forced to announce even more restrictive monetary policies – yet, the economic downturn is already entrenched. Interest rate hikes – both the expected and the ones which have already taken hold – are now affecting the economy, with a time lag of several months. Central banks are thus finding themselves under pressure to determine how far to tighten their monetary policies to establish the best balance: curbing inflation without stalling the economy. Despite this, the International Monetary Fund has published a forecast of a 3.2% global economic growth for 2022, yet this is likely to fall to 2.7% in the coming year. This further complex economic burden could result in an even sharper decline in growth.

Read more in the Macroeconomic Comment by Peter von Elten.