Central banks have the last laugh: Inflation tamed without a recession

The Fed commenced tightening from mid-March 2022, with a 25 basis points (bps) increase in the policy rate. By June 2022, the policy rate in the US had jumped by 150 bps

The world economy will grow at 3.2 per cent in 2024 and 2025, says the International Monetary Fund’s (IMF’s) latest Economic Outlook. That is below the 3.6 per cent growth rate seen during 2006-15. Yet, the relief over the growth projections is almost palpable. 

There is relief because the battle against record levels of global inflation has been won — or so the IMF declares — without as much loss of growth as was feared. Inflation rates are trending down without the global economy going into recession.  Commentators who had been critical of central banks’ responses to post-Covid inflation have