To curb demand and rein in inflation, central banks around the world have begun to raise interest rates dramatically. The International Monetary Fund predicts that by the end of 2023, global inflation would have dropped to 4.7%, or little under half its present level.
A ‘soft landing’ is desired, meaning that there won’t be any business failures, housing market crashes, or sharp increases in unemployment. But in prior instances of high inflation, achieving such a best-case scenario has proven elusive.
There is rising chatter that rate raise medication may taste sour, from Jerome Powell, the chairman of the US Federal Reserve, to Christine Lagarde, the president of the European Central Bank. In addition, risks associated with major uncertainties, such as the conflict in the Ukraine and tensions between China and the West, are skewed to the negative.
One of the more dire predictions from the IMF came in its monthly October outlook, which said: ‘In summary, the worst is still to come and for many people, 2023 will feel like a recession.’