Federal Reserve to RBI: Central bankers spooked by lingering inflation

Central bankers in a bind: targeting inflation with tighter monetary policy adds to the pressure on economies, but trying to boost demand may ignite prices further.

Many central banks are starting to withdraw the emergency stimulus they introduced to fend off last year’s pandemic recession.

With inflation accelerating, the Federal Reserve is set to slow its asset-purchase program, while peers in Norway, Brazil, Mexico, South Korea and New Zealand are among those to have already raised interest rates.

Behind the shift are signs that the recent inflation scare won’t fade soon amid supply chain strains, surging commodity prices, post-lockdown demand, ongoing stimulus and labor shortages.

 

Complicating the task for policy makers