The world’s major central banks are scratching their heads over how to deal with the rising cost of living. Raising interest rates now could deal a blow to the post-pandemic recovery. Wait too long, and inflation may spiral out of control.

United States

If there is one word that keeps the Federal Reserve’s chair, Jerome Powell, awake at night, it is “transitory”.

By many measures the US economy has roared back from the pandemic recession. Unemployment fell to 4.6% in October, down from the dizzying high of 14.8% at the peak of the pandemic. The jobs market is so hot that record numbers of people are quitting to find new posts and wages are rising. Stock markets keep hitting record highs. People are spending again.

And yet the spectre of inflation hangs over it all. Rising energy costs, increased consumption and supply shortages have sent US inflation surging to an annual rate of 6.2%, a level not seen for more than 30 years….

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