Economics
Supply-Crunch Inflation Gives Central Banks an Unfixable Problem
- Surging prices worldwide are triggering interest-rate hikes
- Central banks are being warned of policy error if demand slows
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The global economy’s supply crunch is propelling inflation at such a fast pace that central bankers may be forced to respond, even though fixing that imbalance is beyond their power.
Their dilemma is that it’s hard to tell just how much of the inflation is being driven by a resurgence of demand as lockdowns end, and how much by supply strains caused by log-jammed ports and shortages of materials and workers.