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No easy way out for policymakers

Jun 15, 2022

In the June BofA Global Fund Manager Survey, institutional investors provide a dire global economic outlook for the next 12 months. They expect stagflation, namely subdued economic activity combined with inflation, that forms a toxic mix putting central banks and governments into a difficult position where there is no easy answer in terms of economic and monetary policy. If central banks raise rates too aggressively to fight inflation they slow down their economies even further. An increase in spending by already highly indebted governments is by nature inflationary and will increase their interest burden further. No easy way out for policymakers.

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