Though the US Federal Reserve’s first interest-rate hike of 2023 is smaller than those that preceded it, policymakers have signaled that more increases are on the way, despite slowing price growth. But there is good reason to doubt the utility – and fear the consequences – of continued rate hikes, on both sides of the Atlantic.
LONDON – There are various kinds of facts, the Russian satirist Mikhail Saltykov- Shchedrin once quipped: “There are convenient facts and inconvenient ones; and there are some that aren’t even facts.”
As we enter 2010, a convenient fact is that the world economy has stopped its dramatic decline and started to recover. An inconvenient fact is that the recovery remains fragile. And a non-fact is that the next 12 months will be smooth sailing. On the contrary, serious challenges remain, and they must be addressed with urgency.
The region covered by the European Bank for Reconstruction and Development – Central, Eastern and South-Eastern Europe, Russia, the Caucasus and Central Asia – has been hit particularly hard by the financial and economic crisis that began in 2008. Massive and determined state intervention (Russia and Kazakhstan), or unprecedented coordinated support by international financial institutions (Ukraine, Hungary, and Latvia), has been necessary to prevent even more dramatic falls.
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