To date, the global economy has managed dramatically higher policy rates and inflation with more resilience than anticipated. Central banks have been trying to engineer a slowdown in economic activity to reduce the gap between demand and supply and in so doing, reduce inflation to target over time. The resulting rate hikes have been substantial, leading to dramatically higher debt payments for some households which should have led to a sizeable retrenchment in consumer spending. There are well documented long and variable lags in the transmission of monetary through the real economy and into inflation, but we should ... (full story)