Why interest rates will peak long after inflation
Continuous price shocks have raised risks of persistent high inflation. But early signs that inflation may have peaked isn’t likely to detour central banks from rate-raising paths.
PIERRE-OLIVIER Gourinchas, the International Monetary Fund’s (IMF) economic counsellor and director of research, recently warned central bankers in a lengthy blog post to keep a steady hand with interest rates.
“The hard-won credibility of central banks could be undermined if they misjudge yet again the stubborn persistence of inflation,” he wrote.
They would do well to heed his word. On top of supply-chain and energy-cost pressures already in the system, more challenges are poised to hit consumer prices in the near term.
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