Taming inflation

The US Fed might be able to get the job done at a lower cost than is widely feared

There is great inflation around us across the world. How hard will it be to wrestle this to the ground? In some ways, it appears that a bloody-minded slog is impending. There is much uncertainty and dispersion of views on how this will play out. But there is logic in favour of a cautiously and less gloomy scenario.

The pandemic kicked off a strong macro policy response in developing markets (DMs). The fiscal policy played at World War 2-levels in the US, encouraged by what was then the impending election in November 2020. The central banks in DMs cut rates sharply,