Talks of Surging Inflation and Demand Leave Convening Central Banks Divided

The Index Today — Major central banks around the world are holding meetings to review the economic impact of the pandemic, even as a clash between topics of rising inflation and demand drive an increasing rift between members.

The primary focus remains on the arrival of the Omicron variant of the coronavirus and the resulting policy changes and other legal restrictions that can tip the economic scales unfavorably. The less effective the vaccines prove to be, higher the risk to global markets. Freya Beamish, the Head of Macro Research at TS Lombard, said, “The likelihood of policy slip-ups is now much, much greater.”

The U.S. Federal Reserve Chief, Jerome Powell, is expected to announce the withdrawal of stimulus and a possible interest hike in the face of continuing inflation surges. While ECB chief Christine Lagarde will also follow suit with stimulus withdrawals, she does not anticipate increasing interest rates until 2023. Despite rising starting salary rates and inflation, the Bank of England has also decided to put a pause on their decision to increase borrowing costs.

However, the Omicron variant will be the final determinant of the economic policy of 2022.