Pay attention to the busy "water collection" of central banks in many countries. Will prices be more expensive this year?

In order to deal with a series of problems brought about by the epidemic, such as supply chain restructuring, labor shortage and rising commodity prices, "flood irrigation" has become the consensus of many central banks. However, after the currency overload loses its short-term effect, the soaring inflation is unbearable. As a result, since the end of 2021, the multinational central banks that have worked together to flood have turned to work together to suppress inflation. With regard to the global inflation situation in 2022, the analysis shows that affected by the withdrawal of loose policies, the global inflation level will decline in 2022, but most of the factors contributing to this round of inflation will continue to exist. The large inflationary force bred by excessive monetary development is difficult to eliminate in the short term, and rising prices will still haunt the global economy.









2021 with soaring prices







According to the latest forecast of the International Monetary Fund (IMF) in October 2021, the year-on-year growth rate of the global consumer price index (CPI) in 2021 will rise to 4.3% from 3.2% in 2020. Consumer prices in developed economies such as the United States and Europe have also risen sharply. In November 2021, the US CPI reached 6.8% year-on-year, a new high in recent 40 years; The euro zone harmonized consumer price index (HICP) reached 4.9% in the same ratio, the highest since statistics were available in 1997; The same ratio of CPI in Britain reached 5.1%, a new high in recent 10 years. In addition to end consumer goods, global commodity and production material prices have also experienced sharp increases. From January to November 2021, the IMF's primary product price index rose by 50%, of which the energy product price index rose by 100%. In November 2021, the US producer price index (PPI) reached 9.6% in the same period, the highest since 2010; In October 2021, China's PPI was as high as 13.5% year-on-year, the highest since 1996.





The analysis pointed out that affected by inflation, some countries, such as the United States, try to swing the supply chain to meet their own needs, but this will destroy and rebuild the global supply chain pattern formed in the past 30 years. Such a collision will be more intense in the future. It is difficult for the supply chain to evolve smoothly, and inflation is bound to increase.






Many central banks are busy collecting water







Soaring prices have aroused the vigilance of many countries. Taking Turkey as an example, it is amazing that the inflation rate has risen all the way to 36%.





First, since the end of last year, the Fed's monetary policy has "turned Eagle" beyond expectations, and many parties have predicted that its interest rate increase time will probably be earlier than the market expectation.





Covid-19 last month raised the benchmark interest rate from 0.1% to 0.25% in December 16th, the first time it raised the benchmark interest rate since the new outbreak. The Bank of England became the first of the world's three major central banks to raise interest rates.





The European Central Bank also expressed its position of marginal tightening, "in 2022, it will decide whether to suspend bond purchase in a data-driven way. In extreme cases, it is possible to raise interest rates at the end of 2022 or early 2023, which is roughly the same time as the third interest rate increase in the United States."





Due to its own economic structural problems, although the Bank of Japan is still keen to maintain ultra loose monetary policy, it has significantly reduced ETF purchases in 2022, or will fall to the lowest level since 2012.





The Norwegian central bank and the New Zealand Federal Reserve are the two G10 central banks that take the lead in raising interest rates in 2021, and are likely to continue to raise interest rates in 2022; Norway is also the first developed economy to raise interest rates after the outbreak. The Central Bank of Brazil has become the main central bank with the largest number and range of interest rate increases during the year, raising interest rates by 150 basis points to 9.25% at its latest meeting.





In emerging markets, up to now, 10 of the 21 central banks have raised interest rates and 3 have cut interest rates (Indonesia, Turkey and Northern Macedonia).






In 2022, the decline of inflation rate is limited







According to the analysis of Deutsche Bank, with the repair of the supply chain, the return of labor supply and the fact that commodity prices are still below the peak, inflation may fall back to the target level before 2024.





The analysis pointed out novel coronavirus pneumonia's global probability of inflation dropped in 2022, but it may still be higher than the level of the new crown pneumonia epidemic. According to the latest IMF forecast, the year-on-year growth rate of global CPI will fall from 4.3% in 2021 to 3.8% in 2022, but still higher than 3.5% in 2019. Among them, the inflation rate of developed economies will fall from 2.8% to 2.3%, and that of emerging and developing economies will fall from 5.5% to 4.9%. Meanwhile, the novel coronavirus pneumonia has been different from the redevelopment and rehabilitation industries, and the difference in the consumer product production cycle itself, which makes some countries and the global inflation cycle mismatch, which means that inflation trends or converges in different economies.





Yang Panpan, deputy director and associate researcher of the International Finance Research Office of the Institute of world economics and politics of the Chinese Academy of Social Sciences, pointed out that the main central banks are no longer obsessed with the supply and temporary characteristics of inflation and the uncertain impact of factors such as the epidemic, but exert greater efforts to maintain price stability. It should be noted that the tightening of loose policy has the smallest contribution to inflation.





She pointed out that the global inflation level will decline in 2022, but most of the factors contributing to this round of inflation continue to exist, and rising prices will still haunt the global economy. It is feared that the world economy in 2022 will be more affected by the alternating factors of inflation and loose policy exit.





Source: International Business Daily



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