Spare a thought for central bankers. Sure, there are good reasons to question the thinking behind a decade-plus of untamed money-printing. But their current in-tray is truly horrid.
“Over the next five years, monetary policymaking is going to be much more challenging than it was in the two decades before the pandemic struck,” said the IMF’s deputy head Gita Gopinath in an interview last month, at the Jackson Hole meeting of central bankers. “Supply shocks are going to be more volatile than we’ve been used to.”
That’s putting it lightly. The Bank of England’s latest forecast for inflation to peak at 13.3 per cent is already seen by many economists as badly behind the curve. Worse, it is far from clear that bank governor Andrew Bailey’s prescription – rounds of interest rate hikes that guarantee an extended recession – will put a dent in spiking global prices for energy and food, the chief source of our woes.