MAMOKETE LIJANE: Economy is not so hot, but the Bank still needs to hike rates
Lauded as central bank, it must be responsive to pressure to maintain its policy credibility
Quite unfortunately, I have an “optimism bias”. I thought the global economy would defy the drag from US monetary policy tightening and maintain growth momentum. This view has now become difficult, if not impossible, to defend. The likelihood that the Federal Reserve (Fed) can get inflation under control without pushing the US and thus the global economy into recession is low.
While some commentators blame the war in Ukraine for food and fuel price shocks and recent inflationary pressures, the truth is that prices were already high before Vladimir Putin decided to invade. Inflation was already evident in the global economy generally and the US economy in particular. The enormous injection of liquidity into the global economy by the Fed, money drops by the Treasury and money drops by the IMF, caused the global economy to recover in record time...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.