Farewell, Transitory: Markets Heed Central Banks’ Inflation Call
- Fed, BOE lead about-turn amid surging price pressures
- Traders add to rate-hike bets, ready for stimulus withdrawal
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The end of 2021 swept away the idea of surging inflation being transitory, setting the stage for markets to game the pace of central bank tightening next year.
A string of central bank meetings in recent days saw policy makers overlook economic risks from the omicron strain in favor of damping price pressures that they had brushed off as temporary a matter of months ago. That led traders to price in more interest-rate hikes, sending ripples through currencies, bonds and stocks.