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I wouldn't make much of it; the economy looks a bit iffy right now due to the surge in energy prices and difficulties sourcing inputs. This affects mainly indus
by dsign 6mo ago
I wouldn't make much of it; the economy looks a bit iffy right now due to the surge in energy prices and difficulties sourcing inputs. This affects mainly industrial enterprises, shipping and transport but those are no small sectors and anything that affects them ripples through the rest of the global economy. Where I live (Northern Europe), not only are those sectors already sacking people, but the banks are rising interest rates well ahead of an expected wave of inflation. This affects both consumer and industrial loans, and it means that many economies are going to continue in contraction or that things may get worse.
- pipes 6mo agoThe raising interest rates right now makes no sense to me. Energy prices and layoffs will kill spending power. I think the central banks will overcompensate because they got inflation so wrong the last time.
- mswphd 6mo agoinflation has been persistently > 2% (and arguably much more, as the current methodology on how to measure inflation is quite flawed). There's a definite risk of inflation expectations shifting, which central bankers really want to avoid. Your point that there's a recessionary risk is real, but lowering rates might lead to stagflation. Both options are pretty bad honestly.
- altmanaltman 6mo agoCan you elaborate on what you mean by "central banks got inflation so wrong the last time"? You mean Covid or 2008?
- pipes 6mo agoCovid. The ex head of the bank of England said as much.
- altmanaltman 6mo agoI mean the American recovery after a global disaster like Covid was actually pretty good given the situation. What would you propose they should have done instead?