Until recently, central banks ignored soaring inflation by continually arguing that the phenomenon of rising prices was “transitory”. Now the global economies fear that stagflation is more likely. Financial and commodity markets may no longer believe that central bankers can do much to avoid the prospect of a long period of high prices and slow growth. Russia’s invasion of Ukraine increased inflationary pressures, including for energy, food and other commodities. The response by countries and companies to pull out of Russia will complicate the trade scenario, which was already looking more depressed due to the Trump-Biden commitment to protectionism. No government can now rely on healthy economic growth for long in this context. Since Russia began its invasion of Ukraine, the price of wheat has skyrocketed, and the price of Brent crude oil hit $ 118. The world’s biggest shipping companies have said they would suspend all deliveries to and from Russia, thereby creating more supply shortages. These moves will exacerbate strains in supply chains and lead to price increases for food, fuel, and more at a time when global central banks are just starting to move to combat pricing...
