Why Central Bankers Are Not Sure They’ve Raised Rates Enough

Global central bankers are cautiously optimistic as inflation slows but fear it’s not sustainable. The Federal Reserve, having raised rates aggressively, faces concerns about stronger-than-expected U.S. consumer spending preventing further inflation decline, and a potential global downturn due to China’s property sector slowdown. Despite calls to tolerate higher inflation, officials struggle to balance the risks of raising rates too little or too much amidst new inflationary shocks like the Russia-Ukraine conflict and retreating globalization. Some officials lean towards an extra rate increase with flexibility if the economy slows faster than anticipated.

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