Central Banks Step Into Potential Policy Error Territory

Could we be entering the zone of a global monetary policy mistake? Recent hawkish stances taken by some major developed market central banks make this a valid question. There is now a meaningful risk that these central banks could overtighten in their quest to quell inflation and help push the global economy into recession as well as induce a financial market recession. China’s central bank, on the other hand, may be making a different type of policy error by not easing policy enough to support the country’s economy.

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