When does (serious) inflation kick in?



10% inflation and 1% interest rates, economics has changed a lot since my uni days.


That 1% is a 13 year high in interest rates shows that ZIRP is a monetary roach motel.
If a central bank wants to address 7% inflation with monetary policy then 1% interest rates are making the problem worse, not better. They would need to get out in front of inflation for increasing rates to do anything useful.
BoE is in an enviable position compared to ECB though.



8.3% Inflation in the US.

Tinkering on rates may only get them so far now


They’d need to be in double digits interest rates to tame this at 8.3%, possibly 15-20% if they were serious about it.:thinking:


the simple fact is this: in a free market, the cure for high prices is high prices.


Transitory? On yer bike says Stephen Roach

Stagflation is making a comeback, according to former Morgan Stanley Asia chairman Stephen Roach.

He warns the U.S. is on a dangerous path that leads to higher prices coupled with slower growth.

“This inflation problem is widespread, it’s persistent and likely to be protracted,” Roach told CNBC’s “Fast Money” on Thursday. “The markets are not even close to discounting the full extent of what’s going to be required to bring the demand side under control… That just underscores the deep hole [Fed chief] Jerome Powell is in right now.”

Roach, a Yale University senior fellow and former Federal Reserve economist, calls stagflation his base case and the peak inflation debate absurd.

“The demand side has really gotten away from the Fed,” he said. “The Fed has a massive amount of tightening to do.”

Roach expects inflation to stay above 5% through the end of the year. At the current pace of interest rate hikes, the Fed wouldn’t meet that level.


Sri Lanka defaults on 50 billion debt.

How many more defaults are likely to occur sometime soon?

What chance deflation kicking in as all this “money” begins to disappear?


Slightly off topic but I’d be interested to hear the arguments against why a ‘controlled demolition’ is very unlikely.