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The Central bank chiefs indicate willingness to maintain high interest rates to control inflation (FT) (www.ft.com)

submitted 2 years ago by operator@kbin.social to c/random@kbin.social

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Leaders of major central banks are ready to increase interest rates to control inflation

They are targeting a rate of about 2%. Mainly influences by the current conditions in the labor markets + rising wages.

What your stand on this? The IMF warns this could trigger a financial crisis. Inflations are high everywhere (~6% EU, 4% US, 9%UK).

Remember - every action you take, take it with the thought of creating a sustainable future for yourself.

PS: Anyone knows of a fitting comminity / magazine?

PPS: We should aggree on a common terminology regarding c/ & m/ ^^

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[–] fiasco@possumpat.io 1 points 2 years ago (1 children)

They know that there's no wage-price spiral, and they know that this inflationary episode is not about excessive demand, which means they know that raising interest rates will not curb inflation. You can even see this in the data they don't talk about: Japan has maintained low interest rates through this whole saga, and its inflation has tracked that of countries that raised them. Because that's how supply-driven inflation works.

This has nothing to do with inflation; it's just an excuse to attack labor activism.

[–] operator@kbin.social 1 points 2 years ago (1 children)

Nice thought, I was thinking. Maybe inflation wouldn't even be there, if the fed would stop intervening. The markets tend to regulate/balance themselves. Maybe we'd be better off already.

[–] fiasco@possumpat.io 1 points 2 years ago

Good lord no. Markets absolutely do not regulate or balance themselves, they get caught in feast-or-famine cycles based on where they are in the current credit binge. The Fed shouldn't be raising rates because the current inflationary episode is not driven by excess demand, and there are no data suggesting a wage-price spiral is coming.