In its latest Global Economic Outlook (GEO), published Thursday, Fitch Ratings highlighted how the sustained rise in inflation has prompted the global central bankers to embark upon monetary policy normalization.
Key takeaways
“There are now signs that price level shocks related to pandemic shortages are starting to morph into ongoing inflation. With monetary policy settings still super-loose, this is worrying central bankers.”
“High inflation is raising policy tensions. The Omicron COVID-19 variant of concern represents a downside risk to growth but could adversely affect supply leading to further price increases, implying risks if central banks delay normalization.”
“Monetary policy responses are becoming more divergent, with ECB interest rates still likely to remain on hold through 2023 and the PBOC expected to cut interest rates in 2022.”
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