Central Bank Interest Rates: The current situation is unprecedented, and so will be the consequences
The FED, BoF and FED are in a sort of rush to raise interest rates which have been raised in a coordinated fashion at a rate not seen in at least the last forty years. As economist Philipp Hemberger observes, this interest rate policy has not only been used by the central banks of advanced countries, but also by those of emerging countries, as can be seen in the graph below. On the left, the increases in Western countries, both compared to the previous month and compared to the previous six months, on the right, the similar graph, but relating to emerging economies.
The graph clearly shows how the current situation is practically never seen in previous years. Even the early eighties showed something similar, at the time things were completely different, because we came from at least a decade of particularly high inflation. Now, however, the inflationary, or stagflationary, flare has actually been much shorter, but has led to a much more violent reaction.
Unprecedented behaviors lead to unexpected consequences never seen before. Furthermore, the causes of inflation are very different between the USA and Europe. So we will see an unexpected and never seen reaction of the economy. For the umpteenth time, the central banks have carried out, and are conducting, an experiment on the living body of the economy and society. Let's get ready to see serious consequences.
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The article Central Bank Interest Rates: The Current Situation Is Unprecedented, And So Will The Consequences comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/tassi-di-interesse-delle-banche-centrali-la-situazione-attuale-e-senza-precedente-e-lo-stesso-saranno-le-conseguenze/ on Mon, 28 Nov 2022 08:00:25 +0000.