The Fed and China Go to War Against Different Foes
One risks overreach to quash inflation, the other has launched an onslaught to shore up growth. The potential dangers — and bounty — could be immense.
Twin assaults.
Photographer: Johannes Eisele/AFP/Getty Images
Now that’s a truly great divergence. The world’s two economic superpowers dispensed with any significant nuance or qualification regarding their policy course. The U.S. central bank declared war on inflation Wednesday, while Chinese authorities indicated that recession is their foe.
The Federal Reserve not only raised its benchmark interest rate, but projected hikes at all remaining meetings of the Federal Open Market Committee this year, and alluded to quite a few in 2023. Covid-19 has been almost written out of the picture; the rapid pace of price increases is the new villain. Hours earlier, Beijing pledged to boost growth and markets, sending stocks soaring and alleviating concerns the Communist Party was deaf to concerns that the once-impressive recovery was petering out.