The markets’ latest narrative pivot on inflation is not the right one for the world’s most powerful central bank.
Mohamed A. El-Erian Bloomberg Opinion Columnist
Analytical directness and intellectual honesty from monetary policy makers are inspiring.
Fed Chair Jerome Powell dangled the idea that the central bank has already done the bulk of what is needed to combat inflation. Let’s hope he’s right.
The path forward for markets will depend on the success of the Fed, the strength of the labor market and the persistence of inflation.
The pain may not be over for investors, but genuine value is being restored, government bonds are mitigating risk again, and the chief risks aren’t derailing the system’s functioning.
Britain can’t stop a cost-of-living crisis in the short term, but it must come up with a new growth model that is designed for the changing structure of the domestic and global economy.
The central bank has to regain control of the inflation narrative to avoid inflicting more economic damage and to restore its credibility.
It probably won’t be possible unless the economy worsens considerably or the central bank slips again.
The World Economic Forum is gathering again and the list of economic problems facing the world is long and getting longer.
The reduction will have significant implications for the economy and financial markets. Here are some key issues to watch.
Russia’s invasion has amplified six significant evolutions in finance and the global economy.
Its credibility eroded, the central bank appears to have a choice between risking a recession or prolonging inflation.
The central bank dug itself into a hole, and the way out means risking either a recession or future price and financial instability.
Economics, finance and related policies aren’t the main drivers of stock prices now, and the war in Ukraine offers only uncertainty.
The West’s response to Russia’s invasion will most likely have significant consequences for the financial system and investors.