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Daniel Moss

Searching for the Least Bad Version of Monetary Hell

Central bankers have to pick between the immediate fight against inflation and the looming battle to stave off a recession.

Between a rock and a hard place.

Between a rock and a hard place.

Photographer: SYFY/NBCU Photo Bank via Getty Images

Policy makers are fighting the devil in front of them rather than the goblin lurking around the corner. After years of wishing for and trying to conjure faster inflation, the overwhelming focus now is on slowing things down. A global slump seems increasingly possible — if such a downturn isn't here already.

It's been an extremely discouraging week: Company earnings in the US are falling short of estimates and Federal Reserve Chair Jerome Powell said he's prepared to keep raising rates. In an unedifying spectacle, current and former UK officials are debating who’s to blame for the crisis, while the Bank of England governor conceded on Tuesday he feels “helpless” in the face of escalating global price pressures. In China, a string of indicators pointed to a collapse in business activity; the economy may not grow at all this quarter, thanks to Beijing's zero-Covid approach. Bonds are rallying as fears of a new downturn propel a desire for havens.