Monetary tightening to vary among the major economies

Significance

Contexts differ: US GDP growth is more robust than EU, Japanese or UK growth. Persistently high commodity prices are fuelling inflation expectations and reinforcing the permanent component of inflation by creating second-round effects as companies pass higher input prices on and grant pay rises.

Impacts

• Medium-term price developments remain highly uncertain; much hinges on expected declines in commodity price inflation later in 2022.
• Stagflationary forces in the United Kingdom and euro-area will set a dilemma for policymakers about supporting activity or curbing prices.
• The pace of actual monetary policy tightening is subject to substantial risks on the upside and downside due to global uncertainties.