Business Standard

Fed hiking cycle: What next?

We may need to be prepared for greater volatility in asset markets and no Fed riding to the rescue to save markets


Illustration by Binay Sinha

Akash Prakash
It is now abundantly clear to most investors that the Federal Reserve in the US has underestimated inflation and fallen significantly behind the curve. The same comment can be made for most developed world central banks in differing degrees. Inflation is a problem across the world and this genie will not go back into its bottle easily.

Over the past 12 months, inflation expectations have been consistently too low, and each new data point has forced the consensus to raise forecasts. This pattern is especially pronounced in the US. This raises the dangerous spectre that current forecasts for much higher inflation
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Mar 28 2022 | 10:52 PM IST

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