Recession now looks like the price to pay for beating inflation

After underestimating the worst inflation outbreak in decades, central banks are now driving their economies headlong toward recession in order to tame prices.

The stark outlook is stoking fears that policy makers will end up overreaching as they push ahead with aggressive interest-rate hikes, just as some now concede they overstimulated through the pandemic recovery.

For now, central banks across many advanced and emerging economies have little option but to keep on hiking in the face of inflation that has yet to peak. Bloomberg Economics sees global inflation edging up from 9 per cent year-on-year in the second quarter to 9.3 per cent in the third quarter before slipping back to a still uncomfortable 8.5 per cent by year end.