Market Outlook
Central banks weigh dangers of inflation and war ‘shocks’
At the start of 2022, bond investors were already facing the highest inflation rates in decades across most large western economies. Now, following Russia’s invasion of Ukraine last month, which drove commodity prices to their highest level since 2008, inflation well in excess of central bank targets is expected to stick around for even longer. For central bankers, this economic fallout from the Ukraine war has sharpened a dilemma: how to tackle rising prices without choking off economic recovery from the coronavirus pandemic?
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