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The Inflation Picture Gets Murkier

Despite signs that inflation in most major economies has peaked and is trending back down, recent data releases have renewed fears that central banks will have to tighten monetary policy still further. In the face of maddeningly mixed signals, much will depend on a few key factors.

LONDON – In January, I expressed optimism that a recession across the Western world (and beyond) was becoming less likely, and high-frequency indicators since then have indeed supported a benign outlook. This is especially true in the United States and China, now that it has reopened, but it also applies to continental Europe, the United Kingdom (to a more modest degree), and many developing and emerging economies.