Inflation will be harder to bring down than markets think

Central banks might might allow inflation to run above their targets, which would bring an economic sugar rush. (Image: Getty)

The Economist

Sat, 18 Feb 2023

Given how woefully stock and bond portfolios have performed over the past year or so, you may not have noticed that financial markets are floating high on optimism. Yet there is no other way to describe today’s investors, who since the autumn have increasingly bet that inflation, the world economy’s biggest problem, will fall away without much fuss. The result, many think, will be cuts in interest rates towards the end of 2023, which will help the world’s major economies – and most importantly America – avoid...

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