Recession now looks like the price to pay for beating inflation

After underestimating the worst inflation outbreak in decades, central banks are now driving their economies headlong toward recession in order to tame prices. The stark outlook is stoking fears that policy makers will end up overreaching as they push ahead with aggressive interest-rate hikes, just as some now concede they overstimulated through the pandemic recovery.

Among emerging economies, the South African Reserve Bank lifted its rate by 75 basis points, its biggest increase in borrowing costs in almost two decades, while the Philippines this month surprised with a 75 basis points hike in an unscheduled decision. In the UK, BOE Governor Andrew Bailey has had to defend against attacks from politicians in the ruling Conservative Party who blame the bank for moving too slowly on inflation.

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